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Stock prices, bond yields and cryptocurrencies like bitcoin surged in the U.S. Wednesday as voters returned former President Donald Trump to the White House and the Republican party gained control of the Senate.
Many investors expect Trump's victory to lead to faster economic growth and more market-friendly policies.
Futures for the S&P 500 gained 2.2% before the bell and futures for the Dow Jones Industrial Average climbed 3.2%. Nasdaq futures rose 1.6%.
Futures tied to the Russell 2000 index of smaller companies, which tend to rely more heavily on the U.S. economy for their income, soared more than 6%.
The price of bitcoin jumped nearly 8% to a record $75,345 before falling back slightly. Trump pledged support for cryptocurrencies during the campaign. Shares of the crypto exchange Coinbase rose 13% in premarket and almost all cryptocurrencies surged higher, including dogecoin, which jumped 18%.
Bank stocks, which could benefit from less restrictive regulations, rose in premarket trading. JPMorgan, the world’s biggest bank by assets, gained nearly 7%. Capital One rose 11.3%.
Tesla, led by Trump supporter Elon Musk, jumped nearly 13%. The company’s size gives it a big advantage in the electric vehicle market if, as expected, Trump does away with rebates and tax incentives for EVs, says Dan Ives of Wedbush.
Shares of Tesla's competitors largely fell.
Trump is likely to undo some of the Biden administration’s effort to fight climate change. Renewable energy stocks such as First Solar and Enphase are down by double-digits in premarket trading. First Solar has been a big beneficiary of the Biden administration’s Inflation Reduction Act.
“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.
Trump Media & Technology Group, the company behind the former president’s Truth Social platform, spiked 36% overnight as it became increasingly evident that Trump was returning to the highest elected office in the U.S.
Trump shares had tumbled 10.4% in after-hours trading Tuesday before many polls closed and the results of the election were still uncertain. The stock tends to move more with Trump’s re-election odds than on its prospects of turning a profit.
In midday European trading, Germany's DAX climbed 0.4%, while the CAC 40 in Paris advanced 0.9%. Britain's FTSE 100 was up 1%.
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 rose 154.40 against the yen.
“Undoubtedly, we are seeing a clear consensus among investors that President Trump would herald higher Federal Reserve rates, weaker global growth and greater geopolitical uncertainty, all of which is bullish for the dollar," said Matthew Ryan, head of Market Strategy at the global financial services firm Ebury.
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% of the years where a Democrat was president and 70% 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% since the 2020 election brought 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 2%. Li also expressed confidence that China will attain its growth target of about 5% this year.
In Asia, Japan’s Nikkei 225 index gained 2.6% to 39,480.67, while the Kospi in Seoul shed 0.9% to 2,553.90.
Australia’s S&P/ASX 200 rose 0.8% to 8,199.50.
Hong Kong’s Hang Seng index fell 2.2% 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%, while the Shanghai Composite index edged 0.1% lower, to 3,383.81.
U.S. benchmark crude oil lost $1.34 to $70.65 per barrel. Brent crude, the international standard, also gave up $1.34 to $74.19 per barrel.
The Euro fell to $1.0707.
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Associated Press Writers Kirstin Grieshaber in Berlin and Kelvin Chan in London, contributed to this report.