The US dollar soared on Wednesday as projections indicated Donald Trump’s likely return to the White House following his apparent victory in the US presidential election. Bitcoin also reached an all-time high, with traders betting on potential tax cuts, heightened tariffs, and rising inflation under a second Trump administration.
In addition to the White House, Republicans are set to regain control of the Senate, although final vote counts are still pending. The dollar surged by approximately 1.4% against several major currencies, including the pound, euro, and yen. Asian markets responded strongly, with Japan’s Nikkei 225 index up 2.6% and Australia’s ASX 200 closing 0.8% higher.
In the US, major stock indexes such as the Dow Jones Industrial Average, S&P 500, and Nasdaq are expected to open higher, following Tuesday’s gains of over 1% across all three.
Bitcoin’s value climbed by $6,000 (£4,645), reaching a record $75,371.69 and surpassing its previous peak from March. Trump, who has expressed ambitions to make the US a “bitcoin and cryptocurrency capital,” presents a stark contrast to the Biden administration’s regulatory stance, which included a crackdown on digital currency firms. Trump has suggested he would dismiss SEC Chair Gary Gensler, whose policies on crypto and environmental disclosures have been controversial within the digital currency community.
Trump has also announced plans to appoint billionaire Elon Musk to lead a governmental efficiency audit. Musk, an outspoken cryptocurrency advocate, famously invested $1.5 billion in Bitcoin through his company Tesla in 2021. Tesla’s shares, traded in Frankfurt, jumped over 14% on Wednesday’s opening following the news.
Trump’s potential economic plans are raising concerns in global markets. US bond yields saw a surge on Wednesday as traders anticipated potential inflationary pressures tied to Trump’s economic agenda, including proposed tariff increases, particularly on Chinese imports.
Analysts warn of further volatility, especially in Asia, where Trump’s protectionist trade policies are fuelling uncertainty. “Trump’s trade policies are causing particular angst in Asia, with pledges for aggressive tariffs on US imports,” said Katrina Ell, director of economic research at Moody’s Analytics.
Trump’s isolationist approach to foreign policy also raises questions about US involvement in defending Taiwan. The self-governed island is a major chip producer, essential to the global tech supply chain.
Asian markets reflected these concerns, with China’s Shanghai Composite Index down by 0.1% and Hong Kong’s Hang Seng dropping by 2.23%.
Corporate leaders in the US broadly welcomed Trump’s promise of tax cuts and pro-business policies, though experts caution that these could drive up inflation. “We may see inflationary pressures and fewer rate cuts,” observed Jun Bei Liu, portfolio manager at Tribeca Investment Partners.
Investors will also focus on upcoming announcements from the US Federal Reserve on Thursday, including the latest interest rate decision from Fed Chair Jerome Powell, as well as economic updates from Beijing expected Friday.
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