Election Jitters Send Markets Soaring
As the US presidential election reaches its climax, investors are placing their bets on a potential Republican victory, sending US stock futures and the dollar surging in Asian markets.
Trump Takes Early Lead, But Battleground States Remain Uncertain
Donald Trump has taken an early lead over Kamala Harris, but critical battleground states are still too close to call. This uncertainty has led to a frenzy of activity in financial markets, with Treasury yields climbing to four-month highs and futures markets predicting a 25-basis-point interest rate cut by the Federal Reserve on Thursday.
Investors Bet on Trump’s Economic Policies
Analysts believe that Trump’s plans for restricted immigration, tax cuts, and sweeping tariffs would put upward pressure on inflation and bond yields, whereas Harris’ centre-left policies would have a more muted impact. As a result, investors are snapping up dollars, pushing the currency to a four-month high, and driving up Treasury yields.
Markets React to Election News
“As the early results come in, we’re seeing a classic Trump trade,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Treasury yields are rising, the dollar is strengthening, and bitcoin is up.” Yields on 10-year Treasury notes have jumped to 4.443%, while two-year yields have climbed to 4.316%.
Global Markets Feel the Impact
The election jitters have sent ripples through global markets, with S&P 500 futures climbing 1.2% and Nasdaq futures adding 1.3%. European markets are also feeling the effects, with EUROSTOXX 50 futures firming 0.5% and DAX futures tacking on 0.7%. In Asia, Japan’s Nikkei rose 2.2% as the yen slid, while MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.6%.
Currency Markets in Flux
The dollar index has surged 1.5% to 104.97, its biggest daily rise since early 2023. The euro has slid 1.6% to $1.0748, while the dollar has firmed 1.5% on the Japanese yen to 153.94 yen. The yuan has also come under pressure, sparking reports that Chinese banks are selling dollars to slow its decline.
Commodities Feel the Heat
Gold prices have dipped 0.2% to $2,738 an ounce, off a recent record peak, while oil prices are down in Asian trade as markets nervously wait on the US election results.
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