Dollar and bitcoin soar as Trump wins presidency

The dollar, bitcoin and yields on US government bonds have risen sharply and equity markets jumped from the opening bell on Wednesday heading for record highs after Donald Trump was elected president.
Buoyed by Trump’s inflationary tariffs, tax cuts and pledge to cut red tape, the dollar has risen against a basket of major currencies. The dollar index, which tracks the currency against six major currencies including the pound, euro and yen, was up 1.4 per cent and was set for its best day since March 2023.
Bitcoin also emerged as one of the clear winners of the day. The crypto currency climbed to a record high of $75,397 before paring gains to trade up 6.1 per cent at $73,767 by mid-morning in New York. Trump is seen as more actively supportive of cryptocurrencies than Kamala Harris.
The dollar and bond yields had been rising since the end of September as investors bet on the so-called Trump trade in expectation that his policies on immigration, tax cuts and tariffs would strengthen the dollar and push up inflation, leaving interest rates higher for longer.
The dollar had its biggest monthly gain in more than two years last month and a sell-off in bonds pushed down prices and boosted yields.
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In New York the S&P 500, widely seen as a barometer on the health of the US economy, was 2 per cent higher at 5,929.25 on Wednesday while the technology-heavy Nasdaq index was up 1.6 per cent at 20,671. The Dow Jones industrial average had risen 2.9 per cent to 43,596.
Wall Street’s fear gauge, known as the Vix, fell to a six-week low, as investors cut bets that election uncertainty could stoke market volatility.
Shares linked to the newly elected US president were particularly in the spotlight. Tesla stock jumped 11 per cent with Elon Musk, chief executive of the electric car marker, having backed Trump throughout his electoral campaign. Trump has promised to make Musk head of a government efficiency commission.
Bank stocks led the market higher, in part on hopes that a stronger economy would mean more customers getting loans and paying them back with interest. They also rallied in anticipation of lighter regulation from a Republican White House, which could also spur more mergers and buyouts where investment banks could earn fees. JPMorgan Chase rose 8.3 per cent, and the 5.1 per cent jump for financial stocks in the S&P 500 was by far the biggest gain among the index’s 11 sectors.
Trump Media & Technology Group, in which the president-elect owns a majority stake, were just over 11 per cent higher. From their all-time lows in late September, they have nearly tripled in value. His stake was last valued at about $5 billion.
The expectation of tariffs has hit the currencies of America’s major trading partners, with the euro, pound, Japanese yen and China’s yuan all down against the dollar. Trump has threatened to impose tariffs on all imports, including 60 per cent on everything from China, which economists warn will end up as a tax on the American people and increase inflation. The pound was trading down 1.1 per cent against the dollar at $1.29.
The yield on the 10-year US government bond rose 17 basis points to a four-month high of 4.47 per cent, increasing a sell-off in bonds that began in September; yields rise when bond prices fall.
The yield on the 30-year Treasury rose 21 bps to 4.66 per cent, its biggest one-day increase since the start of the pandemic in March 2020. This rise US borrowing costs for longer-dated bonds suggested concern from investors about the deficit path for the American economy.
Justin Onuekwusi, chief investment officer at wealth manager St James’s Place, said: “The big challenge for markets is that if you do see tariffs come through you need to balance the short-term nature of inflation risks with the medium-term aspect of lower growth. The market appears to be thinking about inflation right now.”
Major European stock markets opened higher but by mid-afternoon in London they had reversed those gains. The FTSE 100 was down 0.2 per cent, Germany’s Dax was 1.1 per cent lower and France’s CAC40 had lost 0.6 per cent.