The US dollar surged and bitcoin hit a record high yesterday before former US president Donald Trump claimed victory in the US election, with traders ramping up bets on fresh tax cuts, tariffs and rising inflation.
While polls had shown the race on a knife edge, the Republican fared far better than his Democratic opponent, US Vice President Kamala Harris, as results rolled in.
Both candidates picked up expected wins in safe states, but indications that the business tycoon was on course for a second term boosted the so-called “Trump trade.”
Photo: EPA-EFE
News that the former president’s party had won control of the Senate also boosted the prospect of sweeping tax cuts, more tariffs and deregulation — seen as a boost for the greenback.
The US dollar jumped 1.5 percent to ￥154.38, its highest since July, and was also up more than 1 percent against the euro and more than 3 percent against the Mexican peso.
Bitcoin sprung US$6,000 higher to a record US$75,371.69, topping its previous peak of US$73,797.98 in March.
Trump has pledged to make the US the “bitcoin and cryptocurrency capital of the world” and to put tech billionaire Elon Musk in charge of a wide-ranging audit of governmental waste.
Investors are “potentially taking the view that a Republican victory would lead to a surge in demand for the digital currency,” AJ Bell PLC analyst Russ Mould said.
Analysts said a clean sweep of Congress and the White House for Trump and Republicans would likely boost the US dollar and Treasury yields, owing to his plans to cut taxes and impose tariffs on imports.
“The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and higher inflation outlook,” Esho Capital economist and founder Peter Esho said.
“Trade and tariffs and taxation would be the three Ts of the Trump Trade, followed by deregulation,” said Neil Wilson, chief market analyst at Finalto trading group.
However, he added: “Bear in mind as a caveat that the House is still up for grabs and Trump had complete control of Congress last time and it didn’t mean he could do everything he said he would.”
Such an outcome could provide a headache for US Federal Reserve Chairman Jerome Powell as he continues his battle to bring inflation to heel, with Trump’s plans considered inflationary.
The election comes as the central bank prepares to deliver its latest policy decision Thursday amid expectations it would cut interest rates by 25 basis points, having lowered them by 50 points in September.
The US dollar’s surge against the yen rallied stocks more than 3 percent in Tokyo at one point thanks to gains in exporters, while markets in Sydney, Singapore, Taipei, Mumbai and Bangkok also rose.
However, there were losses in Shanghai, Seoul, Wellington, Manila and Jakarta.
Hong Kong was also well down — at one point diving almost 3 percent — on worries about the impact of a Trump presidency on China’s economy and relations between Beijing and Washington.
London, Paris and Frankfurt all rose at the open.
US stock futures rose sharply hours before the opening of markets yesterday.
Futures — essentially bets on what the price of a stock would be at a later date — were up 2.2 percent for the Dow, 2 percent for the broad-based S&P 500 and 1.7 percent for the tech-heavy Nasdaq.
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