Dollar Soars, Stocks Rally as Trump Claims Victory

The Republican candidate made a stunning political comeback as he defeated Vice President Kamala Harris to return to the White House, four years after losing it to Joe Biden.

Well before several U.S. media outlets declared Trump the winner, Wall Street stock futures soared hours ahead of the market's opening bell, as the former president confidently claimed a "magnificent" victory.

Europe's main equity indices jumped in morning trading, while Asia diverged, with Chinese stocks hit by expectations that Trump would impose tariffs on Chinese imports.

Market focus was also on plans to stimulate China's economy, the world's second biggest after the United States.

"Trump trade is in full swing," noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

A Trump win is expected to result in sweeping U.S. tax cuts, seen as inflationary and therefore leading to fewer interest-rate cuts by the Federal Reserve in the coming months.

That boosted the dollar against major rivals, with the greenback rising more than 1.5 percent against the euro.

The Fed announces its latest rate decision on Thursday.

"With the Federal Reserve expected to announce a likely 25 basis-point cut tomorrow, we are already seeing expectations reined in for the December meeting given the perception that Trump's policies are inherently inflationary," forecast Joshua Mahony, analyst at Scope Markets.

U.S. Treasury yields also gained support on Wednesday.

"Investors are bracing for tariffs and a clampdown on U.S. immigration, policies considered to be inflationary, which are likely to mean interest rates may be elevated in the years to come," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

She added that "expectations are high that a Trump presidency will mean fewer regulations on big tech and big finance."

Shares in Tesla soared more than 15 percent in pre-market U.S. trading after Trump praised the electric car maker's CEO, Elon Musk, a key campaign backer, as a "star" during his victory speech.

Bitcoin surged $6,000 higher to a record $75,371.67, topping its previous peak of nearly $74,000 in March.

Trump has pledged to make the United States the "bitcoin and cryptocurrency capital of the world" and to put tech billionaire Musk in charge of a wide-ranging audit of governmental waste.

Elsewhere, oil prices slid "amid expectations that under Trump more crude will flow from U.S. wells," Streeter added.

"Another Trump presidency is likely to place emphasis on energy independence, and his policies are likely to favor fossil fuels, promoting deregulation in the oil, gas, and coal industries," she said.

Source: Reuters