Far-reaching effect: Supporters celebrate the US election results that saw former President Donald Trump returning to office. His victory had US stock futures hitting record highs, the dollar surging and treasury yields jumping. — AFP
NEW YORK: Investors bought US dollars, bitcoin and stocks, and sold bonds as Donald Trump claimed victory in the US presidential election and Republicans took control of at least one chamber of Congress.
US stock futures hit record highs, the dollar surged and treasury yields jumped, while bitcoin broke US$75,000 for the first time – all moves flagged by investors as likely should Trump win over Democrat Kamala Harris.
“Not only are markets positioning themselves for a comfortable Trump victory in the electoral college, but the prospect of a Republican-controlled Congress,” said Matthew Ryan, head of market strategy at Ebury.
The results so far underscore how one of the most unusual presidential elections in modern US history could have far-reaching implications for tax and trade policy as well as US institutions.
The results affect assets globally and will determine the outlook for US debt, the strength of the dollar, and a host of industries that make up the backbone of corporate America.
Leading into Tuesday, polls showed a dead heat between the former President and the current Vice-President.
But by 6am GMT, Trump had won the swing states of North Carolina and Georgia and was leading in several others, according to Edison Research. Fox News projected he had won the presidency.
Republicans also won control of the US Senate, ensuring they will dominate at least one chamber of Congress next year.
Assets whose prices could be helped by Trump’s pledges to raise tariffs, cut taxes and slash regulations shone, while dealers said cash was flowing out of emerging markets and US treasury bonds tanked in anticipation of a ballooning deficit.
“The consequence is a higher path of rates,” said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.
He was buying Asia-Pacific bank shares in anticipation that higher yields and stronger growth would benefit their earnings.
Bank stocks rose 4.4% in Tokyo and outperformed the market in Australia.
Ten-year treasury yields, which move inversely to prices, flirted close to 4.5%.
“A lot of this is based on investors’ views that Trump would cut taxes or at least keep tax rates low. Now that it’s likely to be looking like a red sweep of the White House and Congress, additional cuts are possible,” said Ken Peng, head of Asia investment strategy at Citi Wealth in Hong Kong.
“Deregulation is another major positive for the economy and markets, particularly for the financial, energy and tech sectors,” he said.
Bitcoin surged to a record high, betting on a softer line on cryptocurrency regulation.
Tariff-exposed sectors fared less well. The Mexican peso, which could be hit by tariffs, sank to a two-year low, about 3% weaker than its closing price from the previous session.
The euro headed towards its biggest one-day drop since 2020 and German government bond yields staged their largest one-day drop since January, as investors priced in a sharp slowing in the economy.
In Asia, exporters’ shares slid in Hong Kong, pulling the Hang Seng index down 2.7% and leaving investors girding for a bumpy future.
“With Trump, market volatility is likely to pick up,” said Rong Ren Goh, portfolio manager at Eastspring Investments in Singapore.
“Right now the markets are focusing narrowly on the prospect of tariffs because it is the easiest lever to pull,” he added, but broader trade conflict was possible.
“From this perspective, I think a foreign investor is likely to position more defensively towards China-focused risk.”
Shares in Tesla rallied sharply in Frankfurt, ahead of the US premarket. Elon Musk supported Trump throughout his electoral campaign.
Shares of Trump Media and Technology Group surged 10% in extended trade.
Elsewhere some bankers, investors and analysts said they were waiting out the count, in some cases anxiously, with friends and family.
Joe McCann, chief executive officer of Asymmetric, a macro hedge fund that trades primarily in cryptocurrencies, said he has been tracking election news on several TV screens and monitoring market movements in his Miami penthouse.
“We have not left this room all day,” he said. “We are expecting a volatile night.” — Reuters
