Stocks, bond yields and bitcoin rise as Donald Trump wins the 2024 US presidential election

HONG KONG — The US stock market, Elon Musk’s Tesla, banks and bitcoin all stormed higher on Wednesday as investors bet on what Donald Trump’s return to the White House will mean for the economy and the world. Among the losers, the market sees: the value of the Mexican peso and possibly anyone worried about higher inflation.

The SThe &P 500 rose 2.1% in early trading, on track to surpass last month’s all-time high. The Dow Jones Industrial Average rose 1,292 points, or 3.1%, as of 9:35 a.m. Eastern time, while the Nasdaq composite was 2.1% higher.

Historically, the US stock market has tended to rise regardless of which party wins the White House, with Democrats posting larger gains on average since 1945. But Republican control could mean big shifts in the winners and losers beneath the surface, and investors are increasing their built-up bets. rather about what the higher rates, lower tax rates and lighter regulations that Trump favors will mean.

“Markets are struggling to figure out what will happen next, but for now the market is pricing in higher growth and higher inflation prospects,” said Peter Esho of Esho Capital.

Of course, how much change Trump will be able to effect will likely depend on whether his fellow Republicans win control of Congress, and that has yet to be determined. That could leave room for a pullback in some of Wednesday’s big shock moves. Nevertheless, after Trump’s dramatic victory, the market is divided between fairly clear winners and losers. Among them:

BANK STOCKS, up

Bank stocks led the market higher, partly on hopes that a stronger economy would mean more customers would get loans and pay them back with interest. They also hoped for lighter regulation from a Republican White House, which could also lead to more mergers and acquisitions where investment banks could earn fees. JPMorgan Chase rose 8.3%, and the 5.1% jump for financial stocks in the SThe &P 500 was by far the biggest gainer among the index’s eleven sectors.

CRYPTO, op

Trump has promised to make the country “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. The price of bitcoin hit an all-time high above $75,000, according to Coindesk, and was recently up 7% to almost $74,000. Other cryptocurrencies also rose, including dogecoin, a favorite of Musk. Companies in the crypto industry jumped, including trading platform Coinbase’s 19.4% jump.

TESLA, op

Musk has become a close ally of Trump and is egging on the former president. While Trump could ultimately hurt the electric car industry broadly by withdrawing government subsidies, analysts say Tesla could gain somewhat of an advantage by already being such a big player in an industry. Tesla rose 15.1%, while rival Rivian Automotive fell 7.3%

PRICES FOR TREASURY BONDS, DOWN

Investors see Trump’s policies potentially leading to stronger economic growth, helping to lower prices and raise government bond yields. The yield on the 10-year government bond rose to 4.47% from 4.29% late Tuesday, an important step for the bond market. It has increased significantly from August, when it was below 4%.

INFLATION CONCERNS, up

Investors also see Trump’s policies contributing to future inflation, pushing up government bond yields as well.

“Trump continues to openly tell people that he will raise tariffs not just on China, but on all trading partners,” said Andrzej Skiba, head of BlueBay US Fixed Income at RBC Global Asset Management. “We are talking about 10% tariffs for all global partners. This is a big problem because it could increase inflation by 1%. If you add 1% to inflation figures next year, we will have to say goodbye to interest rate cuts.”

Much of Wall Street’s record push this year was based on expectations of upcoming Federal Reserve rate cuts as inflation appears to be heading back toward the 2% target. The Fed will announce its latest interest rate decision on Thursday, with a cut still expected, according to data from CME Group.

But traders have already lowered their expectations about the number of cuts the Fed will implement by the middle of next year.

FOREIGN CURRENCY VALUES, down against the dollar

Trump has talked about raising tariffs, which would likely mean Trump has also promised to sharply increase tariffs on imports from China, Mexico and other countries, clouding the prospects for Chinese exporters at a time when Beijing has relied heavily on ramping up production to try to raise import tariffs. to revive the slowing economy. The value of the Mexican peso fell another 2.3% against the dollar.

RENEWABLE ENERGY STOCKS, down

Trump is a fan of fossil fuels and encourages the production of oil and natural gas. His victory caused solar stocks to fall sharply, including a 15.1% decline for First Solar.