Stocks, bond yields and bitcoin surge as Trump wins U.S. election

Stock prices, bond yields and bitcoin surged Wednesday as voters returned former U.S. president Donald Trump to the White House and the Republican party gained control of the U.S. Senate.

Investors expect Trump’s victory to lead to faster economic growth and more market-friendly policies.

Ahead of U.S. markets opening Wednesday, the future for the S&P 500 gained 1.23 per cent and the future for the Dow Jones Industrial Average was up 1.02 per cent. The Nasdaq composite future was 1.43 per cent higher.

The price of bitcoin jumped nearly eight per cent to a record US$75,345.00, as investors bet on a victory for Trump, who has pledged support for cryptocurrencies. It later fell back to US$74,525.00.

Bond yields also surged, with the yield on the 10-year Treasury climbing to 4.4 per cent from 4.28 per cent on Tuesday.

“The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and higher inflation outlook,” Peter Esho of Esho Capital said in a commentary.

In early European trading, Germany’s DAX climbed 1.3 per cent to 19,503.40, while the CAC 40 in Paris advanced 1.9 per cent to 7,550.36. Britain’s FTSE 100 was up 1.4 per cent at 8,285.06.

Markets worldwide have been fixated on what the election will mean for U.S. economic, monetary and trade policy, as well as geopolitics. The House has not yet been decided and a split in Congress between political parties would complicate policymaking. A Trump White House is likely to have far reaching ramifications given his support for sharp increases in tariffs, especially on imports from China.

Robert Halver, head of Capital Market Analysis at Baader Bank in Germany said that, “since Donald Trump stands for the economy, it can be assumed that stock markets around the world will go up. With one exception: China, because he will definitely impose tariffs at least on China. That will certainly make life difficult for the Chinese.”

The dollar surged against both the Mexican peso and the Chinese yuan, two key trading partners. It was also up against the yen and the euro.

The broad U.S. stock market has historically tended to rise regardless of which party wins the White House, even if each party’s policies can help and hurt different industries’ profits.

Since 1945, the S&P 500 has risen in 73 per cent of the years where a Democrat was president and 70 per cent of the years when a Republican was the nation’s chief executive, according to Sam Stovall, chief investment strategist at CFRA.

The S&P 500 has risen nearly 70 per cent since the 2020 election brought U.S. President Joe Biden into office. It rallied to records as the U.S. economy bounced back from the COVID-19 pandemic and managed to avoid a recession despite a jump in inflation.

The economy was a key issue for inflation-weary U.S. voters who chose Trump this time around, though mainstream economists have said Trump’s policy proposals would make inflation worse.

Trump has also vowed to sharply raise tariffs on imports from China and other countries, darkening the outlook for Chinese exporters at a time when Beijing has relied heavily on ramping up manufacturing to try to revive its slowing economy.

Chinese markets have been among the most active in the region this week as leaders hold a meeting of the Standing Committee of the National People’s Congress, the country’s legislature.

The gathering is expected to deliver more moves to help spur faster economic growth and resolve mounting levels of local government debt. On Tuesday, upbeat comments by Premier Li Qiang about the potential for both fiscal and monetary policies helped lift share benchmarks in Hong Kong and Shanghai by more than two per cent. Li also expressed confidence that China will attain its growth target of about five per cent this year.

In Asian share trading Wednesday, Japan’s Nikkei 225 index gained 2.6 per cent to 39,480.67, while the Kospi in Seoul shed 0.9 per cent to 2,553.90.

Australia’s S&P/ASX 200 rose 0.8 per cent to 8,199.50.

Hong Kong’s Hang Seng index fell 2.2 per cent to 20,538.38, ending a three-day rally, as investors sought safe-haven assets amid the uncertainties surrounding the U.S. election. The Hang Seng Tech Index slipped 2.5 per cent, while the Shanghai Composite index edged 0.1 per cent lower, to 3,383.81.

In other dealings early Wednesday, U.S. benchmark crude oil lost 90 cents to US$71.09 per barrel. Brent crude, the international standard, gave up US$1.00 cents to US$74.53 per barrel.

Associated Press Writer Kirstin Grieshaber in Berlin contributed to this report.