Post-election US markets live | Dollar marks biggest gain since 2020 and futures rise on Wall Street as investors bet on Trump victory | Financial markets

US presidential election results indicate victory for Donald Trump; Although only two of the seven key states have been decided, the Republican nominee has a significant lead over Democrat Kamala Harris and markets are applauding the new political landscape. The worst-case scenario, where there is no clear victory and the uncertainty lasts longer, appears to be receding and Trump could declare himself the winner on the same day. Yesterday’s election, Tuesday, was the closest and most polarized election in decades, although it was much more focused on domestic and foreign policy issues than the economic agenda. This mitigated but did not completely eliminate its impact on the market.

Investors have made moves since the early hours, in the same direction as they have been over the past few weeks as polls have favored Trump, with Wall Street futures rising, the dollar strengthening against other currencies and Treasury yields rising. rebound. The Trump administration’s scenario calls for tax cuts for big companies (he has promised to cut corporate taxes from 21% to 15%), a wave of tariffs that would likely increase inflation and imbalances in government accounts. The negative note on election night was Europe, where futures fell about 0.5%. The Republican nominee for the White House currently leads the Democratic vice president by 247 delegates to 210, according to mainstream US media projections. While the outcome will be determined in several states, Donald Trump’s lead in districts like Pennsylvania makes it very difficult for Democrats to make a comeback.

Thus, the growth in US stock markets is of a generalized nature after they already closed in positive territory on Monday. Dow Jones futures rose 1.2% after closing 1.02% on Tuesday, while tech-heavy Nasdaq futures gained 1.3%. The Russell 200 index of American small and medium-sized companies is showing greater growth, with futures rising by 2.3%. Smaller companies with more local activity and business in general are seen as potential winners if the Republicans win, given the party’s stated protectionist stance. In Europe, Euro Stoxx 50 futures fell 0.7% and pointed to an opening in the red. Protectionist promises and intentions to raise tariffs on third countries, especially China, as well as the European Union, could penalize exporting companies in both economies. areas. In Asian markets, the Nikkei in Tokyo rose 1.7%, the Shanghai Composite index lost 0.14% and the Hang Seng in Hong Kong fell 2.77%. Oil prices fall 2.3% below $74 on the prospect that Trump’s promise to increase oil production will lead to increased supply.

However, the most significant movements occur in the foreign exchange market. The dollar rose 1.87% against the euro, its biggest gain since the pandemic began in 2020. It stands at 1.073 euros per dollar, the highest level since July. Betting in favor of the dollar was a fundamental part of the Trump trade, that is, the operations of investors who anticipated a Republican victory. The reason is the expectation of economic growth, but also higher inflation and government deficits. A scenario that is a priori incompatible with the forecast of lower interest rates. So, a month ago, futures markets gave almost a 60% chance that rates would fall to 3.75%-4% in March (one percentage point less than now); now this probability is just over 20%. And if a month ago rates on a much smaller share, up to 4.25%-4.5%, were barely 3%, now they are 28%.

The dollar is also highly dependent on long-term interest rates, which determine many international capital flows. And the 10-year Treasury yield will rise 14 basis points to 4.46%, given the likelihood that Trump’s proposed tax cuts and other spending plans will lead to a larger deficit, with the asset also weighed on inflation forecasts. A Trump presidency “will lead to an increase in US budget deficits, which could further increase long-term yields on US government debt,” says Sustainable AM ​​manager Safra Sarasin. Yields on other non-U.S. bonds “have not risen to the same extent, leading to a greater advantage for U.S. yields and a stronger dollar.” In October, as Trump surged in the polls, 10-year bonds rose more than 60 basis points. The US government deficit is 6.3% of GDP and the national debt is 118%.

Another aspect of election night is control of the Senate and House of Representatives. If Trump wins, if the Republican Party also has a majority in Congress, the tycoon’s ability to reshape economic policy will be much greater, especially on tariff and fiscal aspects. In this sense, according to Morgan Stanley, he warns that financial problems could push yields higher if a Republican victory is achieved. For now, the Republican Party has already regained control of the Senate, although the party, especially in the upper chamber, is far from a monolithic bloc, and many senators oppose some of Trump’s policies, in particular the budget and support for Ukraine.

Stock markets – Currencies – Debt – Interest rates – Commodities