Donald Trump’s victory in the American presidential election is causing a whirlwind on the world markets, between record highs in bitcoin, soaring dollars, a roller coaster on European stock indices and a fanfare opening on Wall Street.
Around 3:00 p.m. GMT (4:00 p.m. Swiss), the Dow Jones soared by 3.10%, the Nasdaq index by +2.30% and the broader S&P 500 index by +1.95%. From the opening, Dow Jones and S&P 500 set new session records.
On the American market, the action of the Tesla group, owned by Elon Musk, climbed 10.46%, driven by the billionaire’s stated support for Donald Trump.
In Europe, after an upward opening, the European stock markets are faltering. Frankfurt lost 1.08%, London -0.04% and Milan -1.64%. The CAC 40, the star index of the Parisian market, moved at -0.61% after having jumped by more than 2% in the morning.
“European indices rose earlier, supported by the sharp rise in futures contracts on American indices,” Fawad Razaqzada, analyst at City Index, told AFP.
Investors were also relieved by the “removal of uncertainty” with a clear election result, which “is not going to be discussed, disputed and re-examined for days and days”, estimates Christophe Boucher, director of investments at ABN AMRO Investment Solutions. “The most pessimistic scenario – Trump contesting the results – is avoided.”
But European investors now realize that if the Republican’s program “is implemented, it could be devastating for Europe, with risks to growth and inflation”, underlines Lionel Melka, manager at Swann Capital interviewed by the ‘AFP.
The next president wants to increase import taxes to between 10 and 20% for all products entering the United States, and up to 60% for those coming from China or even 200% for certain types of goods.
Soaring rates
On the bond market, where debt already issued is traded, the interest rate on 10-year US government bonds jumped to 4.45% around 3:00 p.m. GMT on Wednesday, compared to 4.27% at the close on Tuesday, and that with a two-year maturity rose to 4.28%, compared to 4.18%.
Shares of American banks were climbing, driven by soaring borrowing rates. JP Morgan jumped 8.59%, Bank of America 7.33%, Citigroup 9.05%, Goldman Sachs 10.42% and Wells Fargo 12.95%.
This is a sign that the market expects “stronger growth and perhaps higher inflation”, a combination that could “slow down, or even stop,” the rate cuts planned by the American central bank (Fed ), estimates Stephen Dover, director of the Franklin Templeton Institute.
A Fed meeting began Wednesday and concludes Thursday.
Dollar surge
The greenback soared in the wake of the European candidate’s victory. The Dollar Index, which compares the American currency to a basket of currencies, reached its highest level since the beginning of July on Wednesday, at more than 105 points. Against the euro, the dollar soared by 1.94% to 1.0722 dollars per euro, shortly after jumping by more than 2% around 3:00 p.m. GMT.
“In Mexico, concern over possible increases in customs tariffs is causing the peso to plunge,” analysts at Saxo Bank also noted.
New bitcoin record
Bitcoin surpassed the $75,000 mark for the very first time on Wednesday, boosted by the prospect of regulatory relaxation and tax measures favoring the cryptocurrency sector under the presidency of Donald Trump.
The first digital currency by capitalization gained 6.74%, to $73,824.35 around 3:00 p.m. GMT, after reaching a new all-time high at $75,371.67.
Concerns over raw materials
The return of Donald Trump to the White House also revives concerns for American soybeans, whose prices fell on Wednesday, in an uncertain market facing a potential escalation of trade tensions with China, the main destination for American oilseeds.
Oil is also weighed down by Trump’s victory, with the rise in the greenback weighing on demand for crude. As oil is exchanged in dollars, an appreciation of the greenback increases the oil bill.
Furthermore, a trade war with China, the leading importer of black gold, could worsen the slowdown in oil demand.
The two global crude oil benchmarks lost nearly 1% around 3:00 p.m. GMT.
This article was automatically published. Sources: ats / afp
