As the ballot counting for the US Presidential election has started, the global financial markets have already started to react. Although the US stock markets are already closed, key indices ended yesterday (Tuesday) with a bullish trend.
Catch the live update of US Presidential election results here.
No matter who wins, Donald Trump or Kamala Harris, their stance towards policies could move markets significantly. Due to the economic and political dominance of the United States, the US elections affect even the markets outside the country.
Mexican Peso Reacts to Trump’s Lead
One of the most noticeable Trump trades today is the selling of the Mexican peso, showing a move similar to the one seen in 2016 when Trump defeated Clinton, though less dramatic. Back then, USD/MXN jumped from 18.3 to 19.8 on election night, continuing to 20.4 the next day. Today, it has risen about 0.5 points, from 20.2 to 20.7.
The direction of the move clearly indicates market expectations about the election, but the smaller shift shows it's not as surprising as the previous time. Trump's promises of significant tariffs and a new USMCA renegotiation are likely influencing these reactions.
Bitcoin Hits a Record
With the votes being counted, market confidence in Trump’s return to the White House is rising. This is reflected in bonds, the US dollar, and equity futures. One of the clearest signs is Bitcoin, which recently reached $75,000 for the first time.
BREAKING: NEW #Bitcoin ALL TIME HIGH! 🚀 $74.9K! pic.twitter.com/4JWyjs9gD6
— Bitcoin Magazine (@BitcoinMagazine) November 6, 2024
Market Grows Confident in Trump Win
The US dollar has risen again, with similar movements seen in yields and Bitcoin, signalling that the vote is leaning towards Trump. The odds for the GOP in the House have also improved, which will be an important factor to monitor.
In the latest update, Decision Desk HQ has called North Carolina for Trump, making it the first swing state to be decided.
Japanese Stocks Gain
As the counting of US election ballots started, the Japanese stock market reacted quickly. The Nikkei 225 gained more than 1.5 percent today, a significant rally that countered the declining yen.
“Very early results certainly improving the odds for Trump, but it can still go anywhere,” Charu Chanana, Chief Investment Strategist at Saxo Markets, told Yahoo Finance. “The biggest risk to global equity markets is a Democratic sweep, but the odds there are extremely low, or a contested result, which remains more likely.”
However, Hong Kong's Hand Seng Index declined in the early trading hours.
Trump Trades Continue to Rally
As the results from Georgia and Florida came in, all Trump trades have climbed.
Trump is leading in Florida and is projected to sweep the state. Interestingly, he has also achieved an early lead in Georgia, a swing state, which could affect the markets significantly.
The Trump trade is picking up steam in the early hours of vote counting, despite the lack of surprises thus far.
— Bloomberg (@business) November 6, 2024
Zooming out and thinking globally, here's what Trump’s proposed tariffs would mean for the world: https://t.co/hVlzUY0bzR pic.twitter.com/w9Os3Qn1rC
US Dollar Strengthens
The US dollar has strengthened as the ballots have been counted. Any sign that Trump is in the lead could lead to a burst of support for the dollar; however, the currency market is expected to be volatile throughout US election night.
“We think that financial markets were wiping the slate clean on Tuesday and that the real moves will happen once we have a better idea of who will win the election,” said Kathleen Brooks, research director at XTB. “The positive signs for Trump in Georgia are already boosting the dollar, and it suggests that the USD is very sensitive to the results as they get announced.”
Japanese Yen is melting down against USD 👀 pic.twitter.com/JQdljlJkjf
— Peruvian Bull (@peruvian_bull) November 6, 2024
Bitcoin Rises
The cryptocurrency market, which, unlike stock markets, remains open 24/7, received a massive boost from the anticipation of the US election results. Bitcoin has gained almost 5 percent, trading over $71,000 each on election day and is showing strong bullish signs.
Notably, Trump is very supportive of policies regarding cryptocurrencies. He is backed by multiple crypto heavyweights and even called himself the first “Bitcoin President” of the US.
Harris’ crypto stance, however, remains unclear. Despite her Silicon Valley ties, the only instance she mentioned crypto in her campaign was in a Wall Street fundraiser, where she said that her administration would promote innovations in digital assets and other new-age technologies.
JUST IN: 🇺🇸 $71,000 #Bitcoin pic.twitter.com/u3twEMZ1NM
— Watcher.Guru (@WatcherGuru) November 6, 2024
“The outcome of the US election will undoubtedly have a significant impact on the digital assets market, both in the short and long term,” said Amit Malik, President of JAPA (Japan, Asia Pacific, and Australia), WadzPay. “Any immediate regulatory changes or shifts in policy direction, particularly those involving taxation and the treatment of digital assets, are likely to impact market sentiment.”
US Stocks Gain 1% on Election Day
Both the S&P 500 and Nasdaq gained over 1 percent on election day. Despite the rally, the markets are expected to be volatile on Wednesday, when there will be certainty regarding the next US President.
How has the S&P 500 performed after an election? Let's take a look... https://t.co/X0spCfxMSI pic.twitter.com/alKcVYeJ6p
— Stocktwits (@Stocktwits) November 5, 2024
However, bond market volatility fell back on Tuesday, although the BOA Move index of bond market volatility is still at its highest level for more than a year. The VIX index, which measures market volatility, also fell back 2 points from 22 to 20.
