Wall Street zooms: US stocks salute Trump’s return, check out top gainers here

Trump card in Wall Street: Donald Trump's recent electoral victory has triggered a surge across US financial markets, driving stock indexes to all-time highs and strengthening the dollar, while Treasury prices dropped amid investor expectations of tax cuts and tariffs under his administration. 

The benchmark S&P 500 rose 2.51 per cent to a record high, with notable gains in small-cap stocks and banking shares poised to benefit from Trump’s anticipated regulatory rollbacks. Bitcoin also reached new highs, while the dollar climbed to its strongest level in over four months, contrasting with a steep decline in Treasury prices.

"The election results are influencing markets across the board," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. Trump's pledges to cut taxes, increase tariffs, and reduce regulatory burdens spurred investors toward assets expected to gain under such policies.

Markets sensitive to higher tariffs felt the impact immediately, with the Mexican peso slumping to a two-year low and the euro marking its largest one-day drop since 2020. Currency trading volumes surged, with the CME Group reporting record levels in offshore Chinese renminbi and Mexican peso futures.

Confidence in "Trump trades" was further bolstered by the Republicans securing control of the Senate, and investors eagerly awaited House results. A Republican-controlled Congress could smooth the passage of Trump's policy agenda, with implications for taxes, trade, and global markets.

Interest Rates Expected to Climb

Investors sold off US Treasuries, partly in response to concerns that Trump's proposed tariffs could stoke inflation, along with potential spending measures that may raise federal debt levels. The 10-year Treasury yield climbed to 4.48 per cent, a four-month high, before easing slightly.

"If he fully enacts his agenda, we could see larger deficits, deeper tax cuts, and higher inflation from tariffs," noted David Kelly, JPMorgan Asset Management's chief global strategist. "These factors could push long-term interest rates higher."

Tesla shares saw a significant boost of 14.75 per cent, with support from Elon Musk , a Trump ally. Small-cap stocks on the Russell 2000 index rose nearly 6 per cent, while bank stocks in the S&P 500 index surged by 10.68 per cent. Bitcoin also hit a record high, driven by optimism for looser cryptocurrency regulations.

Investor activity spiked early on platforms like Robinhood, which reported its busiest overnight session to date. Trading volumes were 11 times higher than usual, with investors flocking to assets potentially benefiting from a Trump administration, including companies associated with Trump and prominent supporters like Musk.

Trump's win, compared to the delayed 2020 election results, provided markets with quicker clarity, removing a significant uncertainty. "The economy is entering the next administration on strong footing, and the stock market reflects the resolution of this uncertainty," said Kurt Reiman, UBS Wealth Management's fixed income Americas head and leader of the ElectionWatch team.

Attention now shifts to the Federal Reserve’s upcoming decision on monetary policy. Analysts anticipate Trump's policies could prompt the Fed to slow down its pace of rate cuts, with Nomura economists forecasting only one rate cut in 2025 after an expected inflationary impact from tariffs subsides.

(With Reuters inputs)