Wall St hits record high after Trump becomes president; Dollar, Treasury yields rise

By Koh Gui King and Dhara Ranasinghe

NEW YORK/LONDON – Wall Street hit a record high on Wednesday and major stock markets around the world surged, while bitcoin hit an all-time high and the dollar fell by its biggest in four years since Donald Trump came to power. Was ready to make the day jump. Was elected American President.

Trump’s decisive victory stunned long-delayed Treasuries and revived the “Trump trade”, as yields sank on expectations that Trump would raise tariffs as promised, leading to a surge in US deficits and inflation. And the Federal Reserve had to cut interest rates less than this. It would have been otherwise.

Trump, 78, recaptured the White House with solid support in Tuesday’s election, despite news reports and polls that suggested it was a close race.

“In the near term, we see US equities to be supported by solid economic and corporate earnings growth, political clarity and Federal Reserve rate cuts,” BlackRock Investment Institute said. “Long-term, a lot depends on how much of Trump’s agenda is implemented.”

The VIX, a measure of stock volatility that is also considered “Wall Street’s fear gauge,” fell 21% as investors celebrated the clarity of the election outcome and flocked to riskier assets across the board.

The S&P 500 index jumped 2.4%, the Dow Jones Industrial Average rose 3.4%, and the Nasdaq Composite jumped 2.7%. All three indices reached record highs on Wednesday. [.N] The MSCI index for world shares rose 1.3%.

Shares of electric car maker Tesla rose 13.6% after billionaire Chief Executive Officer Elon Musk emerged as one of Trump’s key supporters in the final stages of the 2024 campaign.

Investors appear to be betting on Tesla benefiting from Musk’s relationship with Trump, who has said he would create a government efficiency commission chaired by Musk to cut federal spending.

Shares of Trump’s social media company, Trump Media & Technology Group, rose 3.6% to $35.10 after rising as much as 42% overnight. The stock has halved in value since hitting a record high in March.

The dollar index rose 1.6% and was set for its best day since March 2020.

Outside the United States, investors were decidedly less enthusiastic, driven by concerns that higher tariffs under Trump would hurt global trade and economic growth.

European shares gave up earlier gains and fell 0.5%. Mexico’s peso fell to its weakest level in two years.

“The market is certainly moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for U.S. companies,” said Seema Shah, chief global strategist at Principal Asset Management in London. ”

“In emerging markets, you may see China and Europe struggling with the idea that they may face higher tariffs, and US bond yields moving higher with expectations of higher fiscal deficits and inflation.”

US borrowing costs, especially for long-term bonds, have increased, indicating investor concern about the path of the US deficit.

The 10-year Treasury yield rose 16.2 basis points to 4.4551%, its biggest single-day gain in nearly seven months.

The 30-year Treasury yield rose 18.5 bps to 4.6339%, its biggest one-day rise since the pandemic-induced volatility of March 2020. [US/]

Although markets were still confident the Federal Reserve would cut interest rates by 25 basis points at the conclusion of its two-day meeting on Thursday, they slightly reduced bets on more rate cuts in December.

“The big challenge for the market is that if you see tariffs implemented you need to balance the short-term nature of inflation risks with the medium-term aspect of lower growth,” said Justin Onukwusi, chief investment officer at investment firm St. ” James’s place. “The market seems to be thinking about inflation right now.”

In contrast, European government bonds rose and German two-year bond yields fell 11 basis points to 2.19%, while European Central Bank rates were lower in the money market.

“For European businesses, Trump’s return to the White House will mean considerable trade policy and geopolitical uncertainty, which will have a negative impact on growth on the continent,” said Holger Schmieding, chief economist at Berenberg.

currency winners and losers

Bitcoin emerged as one of the clear winners of the day.

The cryptocurrency reached a record high of $75,459 and was last up 9%. Trump is seen as a more active supporter of cryptocurrencies than the Democratic nominee, Vice President Kamala Harris.

Among traditional currencies, the euro was hurt by potential tariffs and a widening gap between US and European rates. It last fell 1.7% to $1.0740, its biggest daily decline since the 2016 Brexit referendum and outpacing a 1.3% decline in sterling.

The dollar jumped 1.9% to 154.43 Japanese yen, and the offshore yuan gained 1.4% to 7.1969 yuan amid reports Chinese banks were selling dollars to slow the yuan’s decline.

China is seen to be on the front lines of tariff risk, and its currency in particular is trading on tenterhooks with implied volatility against the dollar near record highs.

Chinese stock markets rose to their highest in nearly a month as investors anticipate a meeting of top policymakers in Beijing this week to approve local government debt refinancing and spending. Chinese blue chips gave up early gains to settle flat and Hong Kong shares fell more than 2%.

Mexico’s peso briefly fell to 20.8038 per dollar for the first time since August 2022, more than 3% lower than its previous close – the steepest such decline since Mexico’s elections in the summer sent domestic assets under pressure. Caused harm.

Ukraine’s international sovereign bonds rose about 2 cents, boosted by bets that a second Trump term could bring a quick end to Russia’s war in Ukraine.

The sharp rise in the dollar put downward pressure on the prices of oil and other commodities, as it makes them more expensive when purchased in other currencies. [O/R]

US crude rose 0.2% to $72.14 a barrel, while Brent fell 0.4% to $75.17.

Gold prices fell 2.8% to $2,668.26 an ounce, below a recent record peak of $2,790.15. [GOL/],

This article was generated from an automated news agency feed without any modifications to the text.