Investors jumped into the “Trump trade” after Donald Trump secured a second term in the White House, winning the 270 Electoral College votes needed with a win in Wisconsin early Wednesday.
“The Trump trade is roaring to life this morning,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “U.S. yields are rising on expectations of increased debt under Trump. Bitcoin hit a record high, and the U.S. dollar is rallying against major currencies.”
Trump’s strong election night performance had already propelled the Trump trade — a strategy tied to his electoral prospects — to gain momentum. Central themes include Trump’s proposed broad tariffs, which are expected to drive inflation, and plans for large-scale deportations.
Market Responses to Trump’s Victory:
Stock Futures Rally
Supporters of Trump’s tax cuts and regulatory rollback see these as pro-business policies likely to increase corporate profits and spur deals. S&P 500 futures climbed 2.3%, Dow Jones futures rose 2.9% to new highs, and Nasdaq 100 futures were up 1.8%.
“Markets appreciate the clarity of Trump’s win, with futures pointing to a strong open,” noted Neil Wilson, chief analyst at Finalto. Michael Brown of Pepperstone added that with election uncertainty resolved, markets could see continued gains through year-end.
European markets mirrored this trend, with the UK’s FTSE 100, Germany’s DAX, and France’s CAC 40 all posting gains.
Trump Media and Tesla Surge
Trump Media & Technology Group shares jumped up to 62% in premarket, later steadying at a 29% gain. Tesla rose 15%, while crypto stocks like MicroStrategy and Coinbase were up roughly 13% premarket.
Treasury Yields Spike
The 10-year Treasury yield rose 15 basis points to 4.44%, while the two-year yield increased six basis points to 4.25%. Investors expect Trump’s policies to drive inflation, raising the likelihood of higher yields.
U.S. Dollar Surges
The Bloomberg Dollar Spot Index climbed 1.4%, with gains as high as 1.7%, marking its biggest increase in four years. The dollar rose 1.5% against both the euro and yen, and 2.5% against the Mexican peso. Rising inflation expectations could lead the Fed to tighten monetary policy, further supporting the dollar.
Small-Cap Stocks Soar
Russell 2000 futures surged 6.5% early Wednesday, with Trump’s protectionist policies expected to particularly benefit domestically focused small-cap companies.
Bitcoin Hits Record High
Bitcoin reached a new record above $75,000 before stabilizing near $73,000. Seen as a hedge against currency devaluation and inflation, Bitcoin has benefited from Trump’s pro-crypto stance.
Volatility Drops
The CBOE Volatility Index dropped almost 30% around 3 a.m. ET as Trump’s win became clear, suggesting investor relief at the decisive outcome.
