Global Markets Surge as Trump’s Re-election Propels US Stocks and Bitcoin to Record Levels

US equities reached unprecedented levels on Wall Street, and the dollar registered its most significant increase in eight years, following Donald Trump’s re-election to the White House in a landmark victory. Bitcoin also achieved an all-time high, subsequent to Trump’s campaign pledge to prioritize the volatile cryptocurrency. However, investors were anticipating that Trump’s proposals to reduce taxes and implement higher tariffs would fuel inflation and decelerate the pace of interest rate reductions. Sustained higher rates would imply that investors could anticipate improved returns on their savings and investments denominated in dollars. Financial markets and global currencies experienced considerable shifts on Wednesday after the US election results were announced: Bitcoin’s value surged by over $6,600 (£5,120), reaching a new peak of $75,999.04. Trump’s position on cryptocurrencies sharply contrasts with that of the Biden administration, which has overseen extensive enforcement actions against crypto firms. He committed to establishing the US as “the bitcoin superpower of the world”. During his election campaign, Trump had indicated the possibility of dismissing Gary Gensler, the chairman of the US regulatory body, the Securities and Exchange Commission, who has initiated legal proceedings against several cryptocurrency companies. Furthermore, Trump stated his intention to appoint billionaire Elon Musk to lead an audit of government waste. Mr. Musk has consistently advocated for cryptocurrencies, and his company, Tesla, famously invested $1.5bn in Bitcoin in 2021, despite the digital currency’s often highly volatile price. Tesla’s shares climbed more than 14% on Wednesday, reaching a two-year high. Mr. Musk, who is Tesla’s primary shareholder, offered his support to Trump throughout his electoral campaign. Nevertheless, experts noted market instability elsewhere in financial sectors, attributed to global uncertainty and Trump’s potential economic strategies. US bond yields, which represent the return a government commits to paying purchasers of its debt, significantly increased on Wednesday. A bond is essentially a promissory note that can be traded in financial markets, and governments frequently issue bonds to investors when seeking to borrow funds. These movements might indicate that investors foresee an increase in borrowing under the new administration and are consequently seeking a greater return on their capital. Some economists have also cautioned that Trump’s trade-related proposals could deliver a “shock” to nations globally, including the eurozone and the UK economy. Chancellor Rachel Reeves affirmed that the UK would convey “strong representations” to president-elect Donald Trump regarding the necessity of free and open global trade. “The US also benefits from that access to free and open trade with us and other countries around the world, and it’s what makes us richer as societies, to benefit from that open trade,” she said. Donald Trump has previously stated his intention to substantially raise trade tariffs, particularly targeting China, should he become the next US president. Ahmet Kaya, a principal economist at the National Institute of Economic and Social Research (Niesr), also commented that the UK could be “one of the countries most affected” by such policies. Niesr projects that the UK’s economic growth would decline to 0.4% in 2025, a reduction from its previous forecast of 1.2%. Katrina Ell, director of economic research at Moody’s Analytics, stated: “Trump’s global trade policies are causing particular angst in Asia, given the strong protectionist platform on which more aggressive tariffs on imports into the US have been pledged.” Trump’s more isolationist approach to foreign policy has also prompted questions concerning his readiness to defend Taiwan against potential aggression from China. The self-governing island is a significant producer of computer chips, which are vital for the technology underpinning the global economy. Investors also have other critical matters to monitor this week. On Thursday, the US Federal Reserve is scheduled to announce its latest determination regarding interest rates. Statements from the central bank’s head, Jerome Powell, will be closely observed worldwide. North America correspondent Anthony Zurcher provides insights into the presidential race in his twice-weekly US Election Unspun newsletter. Readers in the UK are able to subscribe here. Individuals outside the UK can subscribe here. Copyright 2024 BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking.