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Futures, dollar and Bitcoin spike as Trump wins presidency - what's moving markets
Futures, dollar and Bitcoin spike as Trump wins presidency - what's moving markets
Donald Trump has won the 2024 presidential election, according to the Associated Press and other major news outlets. US stock futures, along with so-called "Trump trades" which have closely followed the former president's prospects of returning to the White House, all rallied.
1. Trump wins 2024 presidential election
Donald Trump has been elected as the 47th president of the United States, according to the Associated Press and other major news networks. Trump had previously declared victory earlier on Wednesday, saying the results from the vote give him a "powerful mandate" as he returns to the White House for a second four-year term. Trump's success seems to have been underpinned by a strong showing in a host of key battleground states, including Wisconsin, Pennsylvania, Georgia and North Carolina. Meanwhile, coverage by the AP and other regional networks showed Republicans had taken a majority in the Senate, the upper chamber of the US Congress, and were also on track to win the House of Representatives, raising the possibility of a Republican sweep in the 2024 elections. Such a scenario would present an easier path for Trump to enact major policy changes if elected. During the campaign, he has proposed sweeping reforms on issues like immigration, international trade, and taxes.
2. Futures surge
US stock futures jumped on Wednesday as traders gauged the increasing likelihood of both a victory for Trump and the Republican Party taking control of Congress. The Dow futures contract had risen by 1,012 points or 2.4%, S&P 500 futures had surged by 119 points or 2.0%, and Nasdaq 100 futures had soared by 341 points or 1.7%. The main averages on Wall Street closed higher as Americans went to the polls on Tuesday, with investors bracing for potential volatility in equity markets this week. A closely-watched Federal Reserve meeting set to end with an interest rate decision on Thursday was also in focus.
3. "Trump trades" return
Along with the spike in US stock futures, so-called "Trump trades" rallied. The US dollar was on course for its biggest single-day uptick since March 2020 against its other major currency pairs, with the Mexican peso slumping in particular. Bitcoin, the world's most popular cryptocurrency, also touched an all-time peak of $75,060. In recent months, these assets have often been seen as proxies for the former president's chances of securing a second four-year term in the White House. Trump's tariff and immigration plans have been viewed as possibly inflationary, which could bolster the greenback. At the same time, Trump has become an outspoken backer of the cryptocurrency industry, fueling bets on Bitcoin. Elsewhere, the yield on the benchmark US 10-year Treasury bond reached its highest level since early July. "Trump trades are in full swing ," analysts at ING said in a note on Wednesday, adding that markets are also "pricing in" a clean sweep for Republicans in Congress.
4. Fed meeting set to begin
Fed officials are due to kick off their latest two-day policy gathering on Wednesday, with markets expecting the central bank to slash interest rates by a quarter-point at the conclusion of the meeting. Although a cut this month is widely anticipated and another one in December remains a possibility, traders have reacted to the election results by lowering their wagers for further reductions next year. Futures contracts tied to the Fed's policy rate now see policymakers stopping rate cuts after only two more drawdowns in the first half of 2025, with borrowing costs settling at 3.75% to 4%. They are currently a range of 4.75% to 5%. "Given that on paper at least Trump’s fiscal agenda is very expansionary while immigration restrictions could impact the supply of workers, the path of Fed easing will likely be more gradual than was the case before," analysts at Vital Knowledge said in a note.
5. Oil slips
Oil prices fell Wednesday after industry data pointed to a rise in US crude stockpiles, while the dollar climbed. The Brent contract slipped 1.8% to $74.20 per barrel, while U.S. crude futures (WTI) traded 1.7% lower at $70.75 per barrel. Data from the American Petroleum Institute data, released on Tuesday, showed that U.S. crude inventories rose by 3.13 million barrels last week, higher than the expected 1.1 million barrels. The official inventory numbers are due later on Wednesday, but if the API release is confirmed it would spur some concerns that US fuel demand was cooling, especially as the winter season approaches. A stronger US dollar also makes commodities denominated in the greenback, such as oil, more expensive for holders of other currencies, in turn curbing demand.
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