The dollar surged and bitcoin hit a record high Wednesday as traders bet on a victory for Donald Trump as he picked up key swing states needed to take the White House, ramping up bets on fresh tax cuts, tariffs and rising inflation.
While polls had shown the race on a knife edge, the
Republican appeared to be faring better than his Democratic opponent Vice
President Kamala Harris as results rolled in.
Both candidates picked up expected wins in safe states, but
indications that the business tycoon was on course for a second term boosted
the so-called Trump Trade.
The tycoon won Georgia and North Carolina, with others still
up in the air, while US networks declared him the winner in key battleground
Pennsylvania with Fox News calling the election in his favour.
News that the former president’s party had won control of
the Senate boosted the prospect of sweeping tax cuts, more tariffs and
deregulation — seen as a boost for the greenback.
The dollar jumped 1.5 percent to 154.33 yen, its highest
since July, while it was also up more than one percent against the euro and
more than three percent against the Mexican peso.
Bitcoin piled more than $6,000 higher to a record
$75,371.69, topping its previous peak of $73,797.98 in March.
Trump has pledged to make the United States the “bitcoin and
cryptocurrency capital of the world” and to put tech billionaire Elon Musk in
charge of a wide-ranging audit of governmental waste.
“The price of bitcoin has closely followed Trump’s position
in the polls and on betting markets,” Russ Mould, an analyst at AJ Bell, said
ahead of Tuesday’s US election.
Investors are “potentially taking the view that a Republican
victory would lead to a surge in demand for the digital currency”, he added.
Analysts said a clean sweep of Congress and the White House
for Trump and Republicans would likely boost the dollar and Treasury yields
owing to his plans to cut taxes and impose tariffs on imports.
Republican control of the Senate and House “could bring
sweeping spending or tax policy shifts. Still, congressional gridlock could be
the ultimate volatility suppressor”, said SPI Asset Management’s Stephen Innes.
And Peter Esho, economist and founder at Esho Capital, said:
“The markets are scrambling to figure out what happens next, but for the time
being, the market is pricing in a higher growth and higher inflation outlook.”
Such an outcome could provide a headache for Federal Reserve
boss Jerome Powell as he continues his battle to bring inflation to heel, with
Trump’s plans considered inflationary.
The election comes as the central bank prepares to deliver
its latest policy decision Thursday amid expectations it will cut interest
rates by 25 basis points, having lowered them by 50 points in September.
The dollar’s surge against the yen rallied stocks more than
three percent in Tokyo at one point thanks to gains in exporters, while markets
Sydney, Singapore, Taipei, Mumbai and Bangkok also rose.
However, there were losses in Shanghai, Seoul, Wellington,
Manila and Jakarta.
Hong Kong was also well down — at one point diving almost
three percent — on worries about the impact of a Trump presidency on China’s
economy and relations between Beijing and Washington.
Traders had been given a strong lead from Wall Street, where
all three main indexes climbed more than one percent.
While the result of the election is being closely followed
globally, it is of real interest in China after Trump vowed to ratchet up a
trade battle with the economic titan by imposing massive tariffs on goods from
the country.
The vote comes as Chinese leaders hold a key meeting to
hammer out a package of stimulus measures aimed at kickstarting growth and
providing support to the colossal property sector, which is mired in a painful
debt crisis.
– Key figures around
0710 GMT –
Dollar/yen: UP at 154.21 yen from 151.60 yen on Tuesday
Euro/dollar: DOWN at $1.0711 from $1.0930
Pound/dollar: DOWN at $1.2853 from $1.3035
Euro/pound: DOWN at 83.32 from 83.82 pence
Tokyo – Nikkei 225: UP 2.6 percent at 39,480.67 (close)
Hong Kong – Hang Seng Index: DOWN 2.6 percent at 20,467.69
Shanghai – Composite: DOWN 0.1 percent at 3,383.81 (close)
West Texas Intermediate: DOWN 1.9 percent at $70.59 per
barrel
Brent North Sea Crude: DOWN 2.0 percent at $74.03 per barrel
New York – Dow: UP 1.0 percent at 42,221.88 (close)
London – FTSE 100: DOWN 0.1 percent at 8,172.39 (close)
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