US and Global Markets Surge as Traders Back Trump’s Lead Over Harris

Photo : AFP

The financial markets have experienced significant surges following the news of Donald Trump's commanding lead over Kamala Harris in the race for the US presidency. As Trump clinched victories in two of the seven key swing states and maintained a strong lead in the remaining five, traders responded by ramping up their bets on his electoral win.

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This political momentum has fueled a surge in the US Dollar and Bitcoin, with traders expecting Trump's presidency to usher in policies that will benefit the financial markets, including potential tax cuts and higher tariffs. Trump's consistent advantage in opinion polls, particularly when it comes to economic matters like inflation and job growth, has only added to investor confidence.

The US Dollar hit record highs in several currencies, climbing to Rs 84.22 against the Indian Rupee, marking a notable increase. It also surged by more than 1.5% to 154.33 against the Japanese Yen, reaching its highest level since July. The Dollar rose by over 1% against the Euro and gained more than 3% against the Mexican Peso.

Bitcoin, too, reached new heights, breaking its previous record set in March 2024. The cryptocurrency surged nearly $6,000 higher to achieve an all-time high of $75,330.88. This rise in Bitcoin's value aligns with Trump’s rhetoric, as he has promised to make the US the “bitcoin and cryptocurrency capital of the world” if he secures the presidency. Additionally, Trump has pledged to appoint Elon Musk to audit government spending, further stimulating market interest.

The ongoing US election result comes as the Federal Reserve is expected to deliver a key policy decision. Analysts predict the central bank may cut the lending rates by 25 basis points, after previously lowering them by 50 basis points in September. This expectation has also contributed to the bullish sentiment in the markets.

In addition to the currency and cryptocurrency rally, US stock futures have risen sharply. Both the S&P 500 futures and Nasdaq saw gains of over 1%, with Wall Street hoping for tax cuts and less corporate regulation under Trump’s leadership. The optimism from the US market also had a ripple effect across Asia, where the BSE Sensex surged nearly 800 points following reports of Trump’s growing lead. Similarly, the NSE Nifty 50 increased by 0.88% to 24,428.15 points, while the BSE Sensex rose by 0.9% to reach 80,193.11.

In Asia, the rally was particularly evident in India, where the IT sector was the biggest beneficiary. The sector rose by approximately 3.5% after data showed a surprise acceleration in the US services sector. Given that many Indian IT firms derive a significant portion of their revenue from the US, expectations of a Trump victory fueled investor optimism in the sector. Analysts from Jefferies noted that Trump’s plans to reduce corporate taxes could drive up demand for Indian IT services and help boost several domestic sectors as well.

However, the reaction in Europe has been more cautious. Traders on the continent are concerned that Trump’s victory could trigger a global trade war, particularly with the imposition of tariffs, which would negatively impact European exports. As a result, European stock indices took a hit, with the EUROSTOXX 50 falling 0.61%, and the DAX dropping 0.55%. The FTSE 100 in London remained largely unchanged.

Meanwhile, MSCI’s index of Asia-Pacific shares outside Japan dropped 0.68%, but Japan’s Nikkei bucked the trend with a 2.4% rise. In the currency markets, the dollar index surged 1.6% to 105.19, marking the biggest daily gain since early 2023. The Euro, on the other hand, weakened by 1.57%, falling to USD 1.0757 from a one-month high of USD 1.0937.

Overall, the market sentiment is highly positive in the US and Asia, driven by expectations of a Trump win and the policy changes it could bring. However, Europe remains more cautious, grappling with the potential global trade ramifications of a Trump presidency. The markets now await the next phase of the US election and the Federal Reserve’s decision on monetary policy, both of which are set to have lasting effects on the global financial landscape.

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