By Amanda Cooper
LONDON (Reuters) – The quick confirmation of Donald Trump as the next U.S. president has boosted the dollar and punished the euro as investors bet on tariffs impacting trade while tax cuts could benefit U.S. businesses.
U.S. stock futures rose by nearly the most in a year, while the dollar was on track for its biggest one-day jump since 2022. Bitcoin hit record highs and government bonds were battered.
Trump’s promises to raise tariffs, cut taxes and cut regulations encouraged investors to dive into a range of assets likely to benefit from such policies.
Markets that could suffer from tighter tariffs, including those of some of the United States’ top trading partners, bore the brunt of the sell-off, which sent the Mexican peso to its lowest point in more than two years, while the euro rallied had gone to its highest level. one day drop since March 2020.
Confidence in markets was further boosted by Republicans winning control of the US Senate, meaning Trump’s party will control at least one chamber of Congress next year, part of a potential so-called ‘Red sweep’.
“It is extremely early to draw conclusions about what a Trump presidency and a possible clean sweep could mean for the US and global economies and financial markets. Higher rates would certainly mean greater inflation and less growth in global trade,” said Philip Shaw, head of the US government. economist at Investec.
“On the stock side, one of the key drivers is Trump’s promise to cut corporate taxes for companies that make goods in America. And of course we have seen a slight increase in US stock futures, and that is also being carried through to European markets.”
European shares rose, led by defense stocks and banks, while renewable energy shares fell.
The election could have far-reaching consequences for tax and trade policy, as well as for American institutions. The outcome has implications for global assets and could shape the outlook for U.S. debt, the strength of the dollar and a host of industries that form the backbone of American business.
INTEREST RATES SEEN HIGHER
“The result is a higher yield path,” said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore. He bought bank stocks in the expectation that higher returns and stronger growth would boost their profits.
Investors sold U.S. Treasury bonds, partly on the expectation that higher rates would inevitably feed through to consumer prices, but also because Trump’s spending promises risked worsening government finances.
