Rudolph Angler Investors flocked to the “Trump trade” early Wednesday as Donald Trump secured his second term as president, reaching the 270 Electoral College votes after winning Wisconsin.
“The ‘Trump trade’ is back in full force,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “U.S. yields are climbing on expectations of increased debt under Trump, while Bitcoin hit a new record. In currency markets, the dollar is rallying against major currencies.”
Before Trump’s victory was declared, strong performance in key states had already boosted assets tied to his election odds. Central to this trend are Trump’s policies, including widespread tariffs and immigration reform, expected to fuel inflation.
Here’s how markets reacted to Trump’s win:
Stock Futures Rise
Trump’s tax and regulatory policies have appealed to investors who see them as supportive of corporate profits. Futures on the S&P 500 rose 2.3%, with Dow Jones Industrial Average futures up 2.9% and Nasdaq 100 futures climbing 1.8%. “Markets are responding positively to Trump’s win, with futures pointing to a strong open,” noted Neil Wilson, chief analyst at Finalto.
European Markets Follow
U.S. futures gains were echoed in Europe, with the UK’s FTSE 100 up 1.3% by 10:30 a.m. local time. Germany’s DAX increased 1.3%, while France’s CAC 40 rose 1.6%.
Trump Media and Tesla Surge
Trump Media and Technology Group shares surged as much as 62% in premarket trading, while Tesla rose 15%. Crypto-exposed companies like MicroStrategy and Coinbase also saw premarket gains of about 13%.
Treasury Yields Increase
The 10-year Treasury yield climbed 15 basis points to 4.44%, the highest since July, and the two-year yield increased to 4.25%. Investors anticipate that Trump’s inflationary policies could constrain the Federal Reserve’s rate-cutting ability.
U.S. Dollar Strengthens
The Bloomberg Dollar Spot Index jumped 1.4%, with the dollar gaining against all G10 currencies and surging 2.5% against the Mexican peso. Rising inflation expectations from Trump’s policies are expected to drive interest rates and the dollar higher, furthering the greenback’s gains.
Small-Cap Stocks Gain
Small-cap stocks, measured by Russell 2000 futures, rose 6.5%, boosted by Trump’s protectionist policies which could favor domestic operations.
Bitcoin Hits Record
Bitcoin reached a new high above $75,000 before stabilizing around $73,000, with Trump’s crypto-friendly stance seen as bullish for digital assets. “Bitcoin is a popular hedge against devaluation and inflation,” said Naeem Aslam, CIO at Zaye Capital Markets. “With Trump’s win, conditions are primed for further gains.”
Volatility Drops
The CBOE Volatility Index, the “fear index,” fell sharply by nearly 30% around 3 a.m. ET as Trump’s victory solidified, suggesting that investors welcomed a clear result.