The first results of the US Presidential election are coming in and, although a winner is yet to be declared, markets are leaning towards a Republican victory, driving stock futures, the USD and cryptocurrencies up.
In overnight trading, stock futures saw significant gains. The Dow Jones Industrial Average futures added 548 points, or about 1.3%, while S&P 500 futures increased by 1.1% and Nasdaq 100 futures climbed 1%.
On Tuesday morning, the stock market rally continued, but betting sites heavily favoured Trump and The New York Times forecast projected a 91% chance of a Republican win. In early morning trading, the S&P 500 gained 1.2%, bringing its 2024 gains to over 21%.
Bitcoin reached an all-time high overnight, touching $75,000, above its previous record of $73,797.68, reached on March 14, according to Coin Metrics.
The US dollar, expected to rise in the event of a Trump victory, rallied against other global currencies. The small-cap Russell 2000 futures jumped 2.5% and the 10-year Treasury yield rose to around 4.43% amid speculation that Trump’s proposed tax cuts and spending plans might increase the fiscal deficit and potentially reignite inflation.
“Markets are piling into the Trump 2.0 trades now as everything goes his way as votes accumulate and Harris’ path to victory is increasingly unlikely,” said John Hardy, Chief Macro Strategist at Saxo Bank.
The final outcome of the election has not yet been confirmed. In fact, it could still take a few days for all the House and Senate seats to be confirmed. However, it seems unlikely that the tides will turn. “We still have to be patient, but markets are trying to call this for good reason as the probabilities lean hard in Trump’s favour,'” Hardy added.
Goldman Sachs has forecast a 3% rise in the S&P 500 should the Republican Party gain control of both the House and the Senate. Even a Trump win with a divided Congress could result in a 1.5% gain, according to the bank. Conversely, a Harris win with a divided Congress might lead to a 1.5% drop.
Trump’s tax cut agenda could boost corporate earnings, but steep tariffs might cause uncertainty and inflation. In contrast, a Harris administration could lead to tighter regulations on industries like banking and healthcare, while promoting clean energy initiatives.
Investors are keenly observing the congressional balance of power, as a single-party sweep could lead to significant changes in spending and tax policies.
