The major indexes surging to record highs following Donald Trump’s victory in the 2024 presidential election on Wednesday. Investors rallied behind assets believed to benefit from a Trump presidency, sending the Dow Jones Industrial Average soaring over 1,500 points to an all-time closing high. The S&P 500 also reached a new peak, while the Nasdaq Composite climbed 2.95%. Bitcoin also hit an all-time high above $75,000, benefitting from expectations of relaxed regulatory policies. Market optimism cantered on Trump’s proposed tax cuts, deregulation, and potential tariffs, with investors eagerly positioning for further growth under the renewed Republican leadership.

Key Takeaways:

  • Dow Hits Record with Historic 1,500-Point Surge: The Dow Jones Industrial Average soared 1,508.05 points, or 3.57%, to close at a record high of 43,729.93. This rally marks the Dow’s most substantial single-day gain since November 2022, fuelled by investor optimism around the economic policies anticipated under Trump. 
  • S&P 500 and Nasdaq Reach All-Time Highs: The S&P 500 surged 2.53% to an all-time high of 5,929.04, while the Nasdaq Composite climbed 2.95%, closing at 18,983.47. Both indexes saw significant contributions from tech and financial stocks, with Tesla leading the tech sector’s advance by rising over 14%. Bank stocks also performed exceptionally well, contributing to the gains.
  • Small-Cap Stocks Surge on Expected Domestic Growth Policies: The Russell 2000, a benchmark for small-cap stocks, surged 5.84% to reach a 52-week high. Small companies, often more focused on the US economy than larger multinationals, are expected to benefit from Trump’s anticipated tax cuts and protectionist trade policies. 
  • Bitcoin Reaches Record High Amid Deregulatory Hopes: Bitcoin, benefitting from hopes for a more favourable regulatory environment, surged 8% to hit an all-time high of $75,400. This rally in digital assets reflects investor optimism about potential relaxed regulations under a Trump administration. Other cryptocurrency-linked assets followed suit, with Coinbase shares rising 32.5% and MicroStrategy climbing 12%, showing broad confidence in the crypto market’s growth potential.
  • Treasury Yields Surge on Fiscal Stimulus Expectations: The 10-year Treasury yield spiked over 14 basis points to 4.433%, reaching its highest level since July. This sharp increase reflects market expectations that Trump’s proposed tax cuts and spending plans could spark economic growth, albeit with potential inflationary pressures. The surge in yields indicates that investors are preparing for a more fiscally expansive environment, potentially widening the fiscal deficit, which could further boost inflation.
  • Oil Prices Slip as Dollar Strengthens and Trade Concerns Emerge: US West Texas Intermediate (WTI) crude oil fell 0.42% to close at $71.69 per barrel, while Brent crude slipped 0.81% to settle at $74.92. The US dollar is now at its highest since September 2022, weighing on dollar-denominated commodities like oil. Market participants are also factoring in potential changes to US foreign policy, with renewed sanctions on Iran and Venezuela likely under Trump, adding to supply concerns that may balance out price declines in the future.
  • European Markets Fall as Investors Digest Trump’s Election Win: European markets turned negative following an initial boost, with the Stoxx 600 finishing 0.59% lower as investors reassessed the impact of a Trump presidency on international trade. Concerns over potential tariffs that could disrupt established trade flows weighed heavily on sentiment. In the UK, the FTSE 100 dropped 0.07% to 8,166, while Germany’s DAX fell 1.14% to 19,036 amid fears that Trump’s policies could affect the Eurozone’s export-heavy economies. France’s CAC 40 and Italy’s FTSE MIB also struggled, closing down 0.51% and 1.54%, respectively. European bond yields were mixed, with Germany’s 10-year bund yield declining to 2.398% and the UK 10-year gilt yield climbing to a one-year high of 4.594%.
  • Asian Markets See Mixed Reaction to US Election Outcome: Asia-Pacific markets had a mixed response, with Japan’s Nikkei 225 leading gains by climbing 2.61% to close at 39,480.67. Meanwhile, the Bank of Japan’s recent monetary policy meeting minutes revealed that policymakers are prepared to consider rate hikes if economic conditions align. Other major indices reacted cautiously; South Korea’s Kospi ended 0.52% lower at 2,563.51, while the Hang Seng in Hong Kong dropped 2.5%, with concerns over the future of US-China trade relations dampening investor confidence. In mainland China, the CSI 300 fell 0.5% to 4,024.28 as investors looked for signals of additional stimulus and economic policies from the ongoing National People’s Congress meeting.

FX Today:

  • EUR/USD Slips as Markets Digest Trump’s Victory: The EUR/USD pair weakened, trading near 1.0735 after breaking down from recent support. The pair now faces resistance around the 200-period SMA at 1.0943, with the 50- and 100-period SMAs at 1.0833 and 1.0837, respectively, reinforcing the bearish outlook. With the potential for US policy shifts under Trump, the Euro could see further downside pressure, with the next support level around 1.0650. A sustained break above the SMAs would be necessary to shift sentiment toward recovery, but for now, the bearish trend remains dominant.
  • GBP/USD Under Pressure Below Key Levels Amid US Dollar Strength: The British Pound dropped more than 1.20% against the US Dollar, trading near 1.2886 as sellers took control following Trump’s election win. The pair struggled to hold above the 50-period SMA at 1.2957 and the 100-period SMA at 1.2978, with the untested 200-period SMA at 1.3100 now serving as a more distant resistance level. Immediate support lies around the recent low of 1.2850, and a break below this could push GBP/USD further downward toward the 1.2800 mark. A reversal may only be signalled if the pair reclaims the 50- and 100-period SMAs.
  • AUD/USD Falls as Trump’s Victory Boosts US Dollar: AUD/USD declined sharply, trading near 0.6566 as U.S. Dollar strength dominated. The pair struggled to sustain above key resistance levels, with the 50-period SMA at 0.6582 and the 100-period SMA at 0.6628, both of which trend downward, highlighting a persistent bearish bias. The pair’s recent recovery attempt was short-lived, failing to break above these resistance levels, reinforcing the downtrend. If AUD/USD falls below 0.6550, it may accelerate toward the 0.6500 level, while a sustained move above the 100-period SMA could signal a shift, though selling pressure remains dominant for now.
  • Gold Drops to Three-Week Low Amid Stronger US Dollar: Gold prices fell sharply to $2,660, marking a three-week low as Trump’s election win lifted the US Dollar and Treasury yields. The metal saw losses exceeding 2.50%, breaking below critical support levels including the 50-period SMA at 2,746 and the 100-period SMA at 2,728 on the 4-hour chart. Gold is currently testing the 200-period SMA at 2,687, which, if breached, could trigger further downside toward the 2,625 mark. A bounce off the 200-period SMA may provide temporary support, with resistance around the 50-period SMA at 2,746 serving as the first target for any recovery attempt. The bearish trend persists until gold reclaims higher SMA levels, with sellers dominating the outlook for now.

Market Movers:

  • Tesla Surges on Election Optimism: Tesla shares skyrocketed over 14% as the market reacted positively to Trump’s election victory, with investors expecting that a supportive regulatory environment under the new administration will boost the company’s growth. This increase contributed to the Nasdaq’s strong performance, helping the index hit an all-time high.
  • Bank Stocks Rally on Deregulation Hopes: Financial giants saw impressive gains, with JPMorgan Chase up 11.5% and Wells Fargo climbing 13%, driven by expectations of looser regulations and potential tax cuts under Trump’s presidency. Citigroup and Bank of America also surged more than 8% each.
  • CVS Health Rises Despite Earnings Miss: CVS Health shares climbed 11% after the company posted third-quarter revenue of $95.43 billion, beating estimates of $92.75 billion. However, the pharmacy retailer’s adjusted earnings per share fell short at $1.09, below analysts’ expectations of $1.51. Despite the earnings miss, the strong revenue figures helped push the stock higher.
  • Clean Energy Stocks Plummet Amid Policy Concerns: Clean energy companies faced significant declines, as Trump’s election raised fears of potential rollbacks in green energy policies. Plug Power dropped 22%, Sunrun lost nearly 30%, and SolarEdge Technologies fell 22%, while Enphase Energy also slumped 17%.
  • Steel Stocks Soar on Protectionist Policy Expectations: US steel companies surged on expectations that Trump’s presidency could bring about new tariffs on foreign steel imports. Nucor shares rallied 16%, Cleveland-Cliffs jumped 20%, and United States Steel climbed 8% as investors anticipated that these policies would drive higher domestic steel prices.
  • Retail Stocks Decline Amid Tariff Fears: Retailers with significant exposure to Chinese imports saw sharp declines, as concerns over Trump’s proposed tariffs weighed on sentiment. Five Below dropped 10% and Yeti fell 3% following downgrades by Bank of America, while Dollar Tree and Dollar General each lost more than 6% and 5%, respectively, on worries about rising import costs.

As the market closed on a high note following Trump’s election victory, investor sentiment reflected a clear optimism for the potential economic changes ahead. The Dow soared over 1,500 points to a record level, driven by gains across sectors expected to benefit under Trump’s pro-business agenda, while the S&P 500 and Nasdaq also reached new peaks. Financial and tech stocks led the rally, with small-cap stocks surging as domestic growth policies appear likely to take centre stage. Meanwhile, the global impact was mixed, with European markets struggling and Asia seeing varied responses amid trade policy uncertainties. With bond yields climbing and the dollar strengthening, the market is now poised to monitor further policy signals from the incoming administration. The outlook remains bullish, as investors adjust to the new political landscape and await further clarity on the economic agenda that could shape market direction in the coming months.