Donald Trump’s victory in the 2024 US presidential election sent shockwaves through the financial markets. US stocks surged to record highs, with the Dow Jones Industrial Average gaining more than 1,000 points in a single day for the first time since November 2022. The S&P 500 and Nasdaq also hit new highs, rising by 2.5% and 2.95%, respectively.
The US dollar experienced its best day in two years, and Treasury yields rose as well. Market analysts attributed the gains to the quick resolution of the election, which provided the certainty investors crave. Trump flipped several swing states from President Joe Biden’s 2020 victory, and Republicans also took control of the Senate.
A so-called red wave could usher in an era of deregulation and other pro-business laws and policies that investors believe could benefit the stock market. However, some market analysts pointed out that the S&P 500 has grown an average of 10% under Democratic presidents compared to 6.7% under Republicans. Gross domestic product has averaged 3.9% under Democratic presidents and 2.4% under Republicans, according to CFRA Research.
Trump’s proposed policies, such as tax breaks and increased public spending, could pose problems for the economy and significantly increase America’s budget deficit. Higher tariffs might challenge the Federal Reserve’s efforts to lower interest rates.
Trump’s victory shakes financial markets
Treasury yields surged, with the 10-year bond yield rising to 4.4%. Trump Media & Technology Group shares surged by close to 24% before closing around 6% higher. The US dollar also rose 1.7% against the euro and British pound.
Bank stocks, including Citi, Bank of America, and JPMorgan Chase, saw significant gains. Stocks in the detention and deportation space, such as GEO Group and CoreCivic, surged 42% and 29%, respectively. Tesla stock also closed 15% higher on Wednesday.
Global markets had mixed reactions. The Stoxx Europe 600 index rose 0.1%, Germany’s DAX fell by 0.3%, and France’s CAC gained 0.1%. London’s FTSE 100 was up by 0.5%.
In Asia, Japan’s Nikkei 225 closed 2.6% higher, while Australia’s S&P ASX gained 0.8%. The Shanghai Composite Index was broadly flat, and Hong Kong’s Hang Seng index closed 2.2% lower due to expectations of increased tariffs on Chinese imports.
