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What’s happening: US stocks surged to record highs on Wednesday, following the victory of Donald Trump in the 2024 Presidential election.
What happened: The Dow Jones index recorded its best session since 2022 after Trump defeated Democratic candidate Kamala Harris to become the 47th US President.
Market sentiment was driven by expectations of Trump bringing in pro-business policies, including tariffs and tax cuts, to boost economic growth.
Why it matters: Donald Trump made a historic electoral comeback, securing 295 votes versus 226 for opponent Kamala Harris. The win makes Trump the oldest President in US history.
Stocks of several sectors spiked on Wednesday, with energy, financials and industrials being among the top performers. Markets remained optimistic about Trump being able to revive the US economy with his policy changes.
Shares of some of the biggest banks, including JPMorgan and Wells Fargo, jumped to fresh highs on Wednesday. Nvidia’s stock added around 4% during the session. Shares of Tesla skyrocketed 14%, as CEO Elon Musk had endorsed Trump on X (formerly Twitter) and at election rallies.
Shares of utilities, real estate and consumer staples bucked the overall market trend, closing lower on Wednesday. Shares of Chinese companies, including Alibaba, also recorded losses amid concerns around heightened tensions with the US.
The Dow Jones index jumped 1,508.05 points, or 3.57%, to close at a record high of 43,729.93 on Wednesday. The 30-stock index has previously added more than 1,000 points in a single session in November 2022.
The S&P 500 surged 2.53% to 5,929.04, reaching an all-time high, while the Nasdaq 100 climbed 2.74% to settle at 20,781.33.
The small-cap benchmark Russell 2000 index rose to a 52-week high on Wednesday, as small-cap firms are more domestically focused and would benefit if Trump’s policies revive the US economy.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, hit its strongest level since July. The US dollar was supported by speculations of tariffs proposed by Trump against major partners of the country.
What to watch: Investors will now turn their focus to the Federal Reserve, which is scheduled to announce its policy decision today. The Fed is projected to cut rates by 25 basis points to 4.5%-4.75%, after announcing a rate cut of 50 bps in September.
Markets will also look out for any insights into the Fed’s plans for the remaining year, as Trump’s policies are widely expected to result in higher inflation.
Data on initial jobless claims, nonfarm productivity and wholesale inventories will also be released today. The number of individuals filing for jobless benefits, which declined by 12,000 to 216,000 in the week ending October 26, is expected to increase to 221,000 in the latest week. Analysts expect US wholesale inventories to decline by 0.1% to $905 billion in September, compared to a 0.2% gain in the previous month.
Context: The GBP/USD forex pair edged higher this morning, as investors assessed the latest political and economic news.
Details: The British pound and euro started the trading day by tanking against the US dollar, as Donald Trump stormed to victory in the Presidential election.
The GBP/USD forex pair recorded sharp losses with the US dollar posting its biggest one-day gain in nearly two years. Positive economic data and supported the sterling later in the day.
Data released on Wednesday showed the S&P Global UK construction PMI remaining in the expansion zone. The figure declined to 54.3 in October, from 57.2 in the previous month, and missing market estimates of 55.5. However, it showed continued growth in the region’s construction activity for the eighth consecutive month.
UK Finance Minister Rachel Reeves presented his first budget on Wednesday, which markets believe could boost inflation and cause the Bank of England to slow its rate cuts.
The GBP/USD forex pair edged higher to 1.2882 this morning, while the EUR/GBP fell around 0.2% to 0.8318.
What to watch: Investors await the Bank of England’s interest rate decision later today. The UK central bank had kept its benchmark interest rate unchanged at 5% during its September meeting. Policymakers had cut rates for the first time in four years in August. Markets widely expect the BoE to announce another interest rate cut of 25 bps today.
Data on house price index and labour productivity will also remain in focus today. The Halifax House Price Index, which rose 0.3% in September, is expected to increase by 0.2% in October. Analysts expect labour productivity to increase 0.3% during the second quarter, versus a 0.2% decline in the previous period.
Other Markets: European indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.07%, 1.13%, 0.51% and 0.54%, respectively.
Poland is planning to make an investment of 3 billion zlotys ($744 million) in ammunition production to ensure it has enough supplies in the event of an attack by Russia. The news sent the safe-haven US dollar index higher in forex trading this morning.
Australia’s private house approvals increased by 2.2% to 9,745 units in September, which lent support to the AUD/USD forex pair.
Japan’s nominal wages surged by 2.8% year-over-year in September. This met market expectations and sent the JPY/USD pair higher in forex trading this morning.
South Korea reported a current account surplus of $11.12 billion for September. This being the fifth straight month of growth in exports lent support to the KRW/USD forex pair.
Brazil’s central bank raised its Selic rate by 50 bps to 11.25% at its recent meeting, which sent the BRL/USD pair higher in forex trading this morning.
South Africa’s foreign exchange reserves, Germany’s balance of trade, industrial production and construction PMI, France’s foreign exchange reserves, payroll employment in the private sector and construction PMI, Spain’s industrial output, Italy’s construction PMI, Eurozone’s construction PMI and retail sales, Turkey’s gross foreign exchange reserves, Mexico’s inflation rate, US unit labour costs, continuing jobless claims, Manheim used vehicle value index, natural gas stocks change, consumer credit and Fed balance sheet, China’s foreign exchange reserves, as well as Argentina’s industrial production.
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