(Bloomberg) — Growing presidential expectations for Donald Trump spread across global markets on Wednesday, with U.S. stock futures rising, Treasury yields jumping and the dollar rising by the most since March 2020.
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S&P 500 futures rose 1.8%, 10-year bond yields rose 14 basis points to a four-month high of 4.41%, and bitcoin rose to a record high — moves that reflect the GOP nominee is on the cusp Reclaim the White House. Trump announced his victory in a speech he delivered to his supporters, as the latest results showed that he won both Pennsylvania and Georgia, and Republicans took control of the US Senate.
The Bloomberg Dollar Spot Index rose 1.4%. The Mexican peso fell by 2.6%, while the Japanese yen and euro fell by at least 1.6%. Futures on the Russell 2000 rose 4.6%. Small businesses with local operations are typically seen as potential winners in a Republican victory, given the party’s protectionist stance. Trump Media & Technology Group Corp. rose. In trading on the Robinhood Markets Inc. platform. Which operates 24 hours a day.
Hong Kong stocks and the yuan fell as investors took into account increased trade tensions. Eastern European currencies posted some of the heaviest losses amid speculation that the region may have to increase defense spending.
A group of Wall Street investors bet that Trump’s stance on industrial policy, corporate tax cuts and tariffs would boost stocks and could fuel inflation – sending bond yields and the US dollar higher. Cryptocurrencies are seen to benefit from Trump’s eased regulation and public support for the digital currency.
“When I came in this morning, it was clear that many assets had decided that Trump had indeed won,” said Luke Hickmore, investment director at Aberdeen. “We may get to 5% on the US 10-year yield. Maybe even this year. People will realize that inflation will rise while putting heavy pressure on the fiscal side.
Wall Street saw the potential for huge moves regardless of the election outcome.
Goldman Sachs Group Inc.’s trading desk said. A Republican sweep could push the S&P 500 up 3%, while a decline of the same size is possible if Democrats win the presidency and Congress. The moves will be halved in the event of a divided government. Andrew Tyler of JPMorgan Securities said anything other than a Democratic sweep would likely send stocks higher.
Risk appetite may decline in the event of a Republican sweep as financial fears fuel yields, but if bond markets take that in their stride, the likes of growth-sensitive cyclical stocks will rise, a Morgan Stanley note says. At the same time, he sees renewable energy companies and consumer stocks exposed to tariffs rising under a scenario in which Harris emerges victorious with a divided Congress, while a corresponding decline in yields would benefit housing-sensitive sectors.
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