The unexpected triumph of Donald Trump in the 2024 United States presidential election sent ripples through the financial markets. American stocks soared to unprecedented levels, with the Dow Jones Industrial Average jumping more than 1,000 points in one day—a first since November 2022. The S&P 500 and Nasdaq also achieved new records, climbing by 2.5% and 2.95%, respectively.
The value of the US dollar had its strongest day in two years, accompanied by a rise in Treasury yields. Financial experts credited the market’s upswing to the swift conclusion of the election, bringing the clarity that investors covet. Trump turned several battleground states from President Joe Biden’s 2020 success, and Republicans managed to regain control of the Senate.
A possible “red wave” may lead to a phase of deregulation and a series of pro-business legislations and strategies that many investors believe will favor the stock market. However, some analysts noted that the S&P 500 has historically risen by an average of 10% under Democratic administrations compared to just 6.7% when Republicans are in office. Additionally, Gross Domestic Product growth has averaged 3.9% with Democratic presidents versus 2.4% with their Republican counterparts, based on insights from CFRA Research.
The proposed initiatives from Trump, including tax incentives and higher government spending, could create challenges for the economy and markedly increase the national budget deficit. Escalated tariffs could complicate the Federal Reserve’s attempts to reduce interest rates.
Financial markets react strongly to Trump’s victory
Treasury yields surged, with the 10-year bond yield climbing to 4.4%. Shares of Trump Media & Technology Group skyrocketed nearly 24% before settling at around a 6% increase. The American dollar appreciated 1.7% against both the euro and the British pound.
Banking stocks like Citi, Bank of America, and JPMorgan Chase experienced considerable rises. Stocks related to detention and deportation, such as GEO Group and CoreCivic, saw increases of 42% and 29%, respectively. Tesla’s shares also finished 15% higher on Wednesday.
International markets displayed varied responses. The Stoxx Europe 600 index inched up by 0.1%, Germany’s DAX dipped by 0.3%, while France’s CAC increased by 0.1%. The FTSE 100 in London rose by 0.5%.
In the Asian markets, Japan’s Nikkei 225 ended 2.6% higher, and Australia’s S&P ASX gained 0.8%. The Shanghai Composite Index remained relatively stable, while Hong Kong’s Hang Seng index concluded 2.2% lower, impacted by the anticipation of higher tariffs on imports from China.
