By Wayne Cole
SYDNEY (Reuters) – U.S. stock futures and the dollar rose in Asia on Wednesday as investors bet that Republican Donald Trump could win the U.S. presidential election, although the race officially remained too close to call.
Trump took an early lead over Democrat Kamala Harris, as solid Republican-leaning states first reported, but the handful of states likely to decide the election were unlikely to see crucial battleground contests.
Treasury yields shot to a four-month high as some betting sites heavily favored Trump, while The New York Time’s closely watched swingometer predicted an 89% chance he would win.
Analysts generally believe that Trump’s plans for limited immigration, tax cuts and sweeping tariffs, if implemented, would put more upward pressure on inflation and bond yields than Harris’ center-left policies.
Trump’s proposals would also cause the dollar to rise and potentially limit how far U.S. interest rates can ultimately be cut.
While markets were still confident that the Federal Reserve would cut rates by 25 basis points on Thursday, futures for next year were in the red with a December decline of 9 ticks.
“As the first results come in, even if they are not that surprising, we see government bond yields rising a bit, the dollar strengthening and bitcoin rising; a kind of classic Trump transaction,” said Brian Jacobsen, chief economist at Annex. Asset management.
The yield on 10-year government bonds rose from 4.279% to a four-month high of 4.471%, breaking last week’s peak of 4.388%. The two-year interest rate rose from 4.189% at the end of New York to 4.291%. [US/]
“If we look at the long end of the curve, it reflects the fact that both candidates are not exactly fiscally conservative, they are both willing to use the fiscal printing press,” said Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions. .
“The biggest issue is whether Trump or Harris will get full mandates,” he added. “If they don’t get blue or red sweeps, it limits the fiscal damage, and that’s the best outcome for bondholders.”
YUAN BUCKLES
S&P 500 futures and Nasdaq futures both rose 1.3% as Wall Street looked to promised tax cuts and less corporate regulation.
European stocks were less enthusiastic because Trump’s tariff policy, if implemented, could spark a global trade war and threaten EU exports.
EUROSTOXX 50 futures lost 0.7%, while DAX futures fell 0.5% and FTSE futures settled flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8%, while Japan’s Nikkei rose 2.3% as the yen fell. [.N[]
In currency markets, the dollar index rose 1.5% to 104.97, its biggest daily gain since early 2023. The euro fell 1.5% to $1.0772, falling from a monthly top of $1.0937 set by the was achieved overnight.
The dollar rose 1.5% against the Japanese yen to 153.94 yen, further away from a low of 151.34. [USD/]
Bitcoin climbed as much as 8.54% to reach a record high of $75,060. Trump is seen as a more active supporter of cryptocurrencies than Harris.
The dollar rose 1.0% against the offshore yuan to 7.1726 yuan, prompting reports that Chinese banks were selling dollars to slow the yuan’s decline.
China is seen as one of the front lines of tariff risk, and its currency in particular is trading on tension, with implied volatility against the dollar around record highs.
Chinese stock markets have risen to their highest levels in almost a month as investors expect a meeting of top policymakers in Beijing this week to approve refinancing and spending on local government debt. Chinese blue chips lost early gains and turned flat.
Gold prices were choppy, dipping 0.3% to $2,734 an ounce after a recent record peak of 2,790.15. [GOL/]
The sharp rise in the dollar put pressure on oil prices and other commodities, as they became more expensive when purchased in other currencies. [O/R]
U.S. crude fell 66 cents to $71.33 a barrel, while Brent fell 76 cents to $74.76.
(Reporting by Wayne Cole; Editing by Shri Navaratnam and Jacqueline Wong)
