(Paris) Donald Trump’s victory in the American presidential election is pushing up the dollar and the stock markets, with Wall Street opening sharply higher.
Posted at 4:29 a.m.
Updated at 10:44 a.m.
Manel MENGUELTI
Agence France-Presse
Around 9:45 a.m. ET, the Dow Jones was up 3.08%, the NASDAQ index was up 2.12% and the broader S&P 500 index was up 2.00%.
From the opening, Dow Jones and S&P 500 set new session records.
“From a market point of view, it’s quite easy. Everything is clear,” commented Karl Haeling of LBBW. “Bonds and commodities are falling, while stocks and the dollar are taking off because of the election result. »
Even before the publication of complete results, Donald Trump was already assured of returning to the White House, following a final vote.
The former head of state won most of the key states, particularly Georgia, Pennsylvania and Wisconsin.
“The fact that the Republican victory is so marked, at least for the presidency and the Senate, implies that we will not have a prolonged period of uncertainty. […] “It’s a big plus” from a markets perspective, Mr. Haeling said.
The partial results did not yet make it possible to determine which party would take control of the House of Representatives.
Investors also saw “the potential for tax cuts, less regulation and a favorable climate for businesses,” added the analyst.
Considered one of the first beneficiaries of this new environment, the technology sector was celebrating.
The major semiconductor players such as Nvidia (+3.11%), Broadcom (+2.88%) or Texas Instruments (+3.25%) were clearly in the green, as were Alphabet and Microsoft.
But their progress remained modest compared to that of Tesla (+13.20%), whose boss, Elon Musk, campaigned for Donald Trump and donated millions of dollars to promote the Republican candidate.
Donald Trump has indicated that he intends to entrust Elon Musk with a major role within his future government, dedicated to reducing public spending.
Another potential beneficiary of less regulation is financial companies, such as JPMorgan Chase (+8.78%) or Goldman Sachs (+10.88%).
But the momentum went well beyond, supporting in particular the industry, like 3M (+3.52%), Dow (+1.40%) or Honeywell (+2.55%).
Conversely, the bond market was battered. The yield on 10-year US government bonds rose to 4.48%, a high in more than four months.
“This is a risk appetite shift of spectacular magnitude,” summarized Patrick O’Hare of Briefing.com in a note.
Unsurprisingly, Donald Trump’s media group, Trump Media and Technology Group, catapulted (+17.32%).
Up and down in Europe
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, was trading 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 already issued debt is traded, the interest rate on 10-year US government bonds jumped to 4.45% around 10 a.m. (Eastern time) on Wednesday, compared to 4. 27% at the close on Tuesday, and that at maturity two years 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 1.94% to 1.0722 dollars per euro, shortly after jumping more than 2% around 10 a.m. (Eastern time).
“In Mexico, concern over possible increases in customs tariffs is causing the peso to plunge,” Saxo Bank analysts 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 leading digital currency by capitalization was up 6.74% to $73,824.35 around 10 a.m. ET, after hitting a new all-time high of $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 benchmarks lost almost 1% around 10 a.m. (Eastern time).
