Afternoon summary
Time to recap again….
Wall Street and bitcoin rallied to fresh record highs and the dollar soared after Donald Trump’s victory in the US presidential election, while renewable energy stocks fell.
Trump was declared the winner on Wednesday morning after securing the 270 electoral votes needed to take the presidency.
The Republicans also grabbed a majority in the Senate and the House of Representatives, giving Trump sweeping powers to cut taxes and impose tariffs on imported goods, which was also judged as a positive for the US currency.
When New York opened for trading on Wednesday, the benchmark S&P 500 rose 2.1%, the Dow Jones industrial average increased 3.1%, and tech-focused Nasdaq composite climbed 2.1% – all hitting all-time records.
That’s the Trump trade,” Marta Norton, chief investment strategist at Empower Investments, told CNBC.
“There’s a lot of emotion, there’s a lot of euphoria, based on perspective in markets today. And I think that doesn’t necessarily mean that’s the way markets are going to trade in perpetuity.”
Shares in the former president and president-elect’s own Trump Media & Technology Group, hours after revealing another heavy quarterly loss, increased by as much as 30% before losing ground in another volatile rally.
The dollar’s climb began after very early indications of a Republican win in Georgia and gathered pace throughout the day.
The dollar index – which measures the currency against six major peers including the euro and yen – advanced 1.25%, having earlier hit a four-month peak.
More here:
The pound is trading below $1.29 tonight, down a cent and a half.
Bitcoin has surged upwards today, currently up 7.8% at $74580, having hit a record high over $75k early this morning.
But shares in German carmakers took a hit today, on fears of a new TransAtlantic trade war.
Trump’s victory was declared just hours after a UK think tank warned that Britain’s growth would be halved if the now-president-elect imposed tough new tariffs on imports.
Here’s our economics editor Larry Elliott on how Trump’s policies will push up consumer prices:
FTSE 100 ends slightly lower
After a historic day, the UK’s blue-chip stock index has ended the session broadly where it began.
The FTSE 100 has closed down 5.7 points at 8166 points, a dip of 0.07% – which feels like a tiny response to such seismic events in America.
But… there are some big moves on the stock exchange today. Electrical equipment rental firm Ashtead’s shares jumped by 5.6%, indicating optimism of faster US growth, while Barclays gained 5.4% on expectations of higher interest rates for longer.
Weapons maker BAE Systems was another riser, up 4.9%, while cardboard box maker DS Smith are up 3.4%.
British Airways’ parent company, IAG, is up 3%, benefitting from the drop in the oil price today.
The weak pound (down 1.5 cents tonight) will have lifted the value of multinationals who earn revenue in dollars.
The losers colum included mining companies Fresnillo (-3.9%) and Antofagasta (-3.7%), tracking the fall in the gold and copper prices today.
While the exact shape and size of Donald Trump’s upcoming tariffs and tax cuts are still unknown, markets have already moved to reflect the fact they will be enacted.
So explains Jonathan Mondillo, global head of fixed income at abrdn, who explains that expectations of a more relaxed regulatory environment have also supported the banks and energy companies.
Mondillo adds:
“It is likely the House [of Representatives] will end up in the control of the Republicans, as such we would expect to see a more ambitious agenda for the incoming President.
While trade and immigration policy are largely within the control of the Executive Branch, a red sweep would put both corporate and individual tax proposals that had been talked about on the campaign trail firmly on the agenda in the important first 100 days of a Presidency. The interplay between trade tariffs and tax cuts will depend to what extent both are enacted, as tariffs act as a headwind to growth while tax cuts are more supportive.
Curves steepened in the first hours during and after the vote count, and have continued to do so today. This is something we think should continue into the long term, particularly for very long dated maturities where there is going to be upward yield pressure.”
A group representing the electric vehicle industry says it was ready to work with President-elect Donald Trump, who has vowed to reverse many pro-EV policies of his predecessor.
The Zero Emission Transportation Association, which includes Tesla, Rivian, Lucid and battery maker LG, said the “next four years are critical to ensuring that these technologies are developed and deployed by American workers in American factories for generations.”
Trump has vowed to repeal Biden administration rules to speed adoption of electric vehicles and said he may back repealing tax incentives for EV sales.
The spectre of stagflation is haunting financial markets today, as investors calculate that Donald Trump’s plans for tax cuts, blanket tariffs and an immigration clampdown would lift inflation pressures and hurt growth.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains:
‘’Fresh nervousness has been sweeping financial markets after Donald Trump’s triumphant win. His policies look set to increase inflationary pressures and swell the US deficit even further, with knock-on effects expected for the UK economy. 10-year treasury yields have jumped as traders assess the impact that the twin promises of tariffs and tax-cuts will have on the price rises and on US government debt levels.
Gilts often move in tandem with treasuries and this special relationship is playing out today, pushing up UK borrowing costs sharply, with 10-year gilt yields rising to the highest level since the Financial Crisis in 2008. UK government bonds had already been skittish, with sentiment souring after concerns about the amount of borrowing the Labour administration was taking on. Now Trump’s win has piled on further pressure
Concerns about the inflationary knock-on effect of the fresh wave of tariffs promised by Trump are seeping through the markets. There is also concern that his trade policies could hold back Britain’s economic growth. The fear of a stagflation scenario emerging in some economies appears once again to be stalking markets..
Reeves: We'll make strong representations to US about importance of free and open trade
UK chancellor Rachel Reeves has told MPs this afternoon that it’s too early to start making changes to forecasts for our economy, because of the US presidential election.
Testifying to the Treasury committee, Reeves adds:
But i would say this, our trading relationship, our economic relationship with the US, is absolutely crucial. The US is the single biggest trading partner, trade between our two countries of, I think, £311bn a year. So of course that relationship is crucial. And of course our special relationship goes much beyond trade, for our security and defence relationship as well
“I’m confident those trade flows will continue under the new president and indeed president trump has been president of the US before and we continue to have a strong and healthy economic relationship
“The US also benefit from that access to free and open trade with us and other countries around the world, and its what makes us richer as societies to benefit from that”
Reeves also said she would make “strong representations” about the importance of free trade to Donald Trump’s incoming administration.
“It’s a trade relationship with the United States and we will make strong representations about the importance of free and open trade, not just between ourselves and the United States but globally.”
Updated
Yup:
The stock market is celebrating Trump's win as the S&P 500 pops to a new record high, but the bond market doesn't look happy as the 10yr Treasury yield continues to rise sharply this morning: pic.twitter.com/z4iIzAmWsO
— James Picerno (@jpicerno) November 6, 2024
10-Year Treasury Yield: 4.45%, highest since July 1.
— Charlie Bilello (@charliebilello) November 6, 2024
30-Year Treasury Yield: 4.64%, highest since May 31.https://t.co/rQuXrxVpWs pic.twitter.com/b2YtIL0sXf
Although equities are surging today, traders are also noting that US bond prices are falling sharply.
That’s pushed up the interest rate (or yield, in market jargon) on 10-year US Treasury bills to 4.45% today, up from 4.28% last night.
That’s the highest level since 1 July.
As bond yields rise when prices fall, this shows that investors are demanding a higher rate of return for holding US government debt;.
They may be judging that more bonds will need to be issued if Trump cuts taxes – or simply that Trump’s economic measures will drive up growth, meaning long-term interest rates will be higher.
In the immediate election aftermath, price action is as follows: stocks are +2%, 10y Treasury yields are +20bps, the US dollar is +1-2% against most currencies, and gold is down 2-3%. Suggests investors are pricing in higher real growth, not inflation. pic.twitter.com/cUzvtVI3VV
— Liz Young Thomas (@LizThomasStrat) November 6, 2024
European stock markets have now fallen into the red, hit by fears that Donald Trump will impose new tariffs on European exports into the US.
Germany’s DAX is now down 1%, with the country’s carmakers hit by trade war worries.
France’s CAC 40 has lost 0.5%, while the Italian FTSE MIB is down 1.5%.
As Neil Wilson of Markets.com puts it (quoting Trump):
The early positivity in Europe has evaporated as quickly as you can say ‘tariffs are my favourite word’.
Trump and the Republicans’ electoral triumph is set to cause short-term market gains, predicts Kate Leaman, chief market analyst at AvaTrade.
The incoming president has historically been a market-friendly candidate, focusing on policies that benefit corporations and investors. A Trump administration would likely continue lowering corporate taxes, boosting large corporations like Apple or Amazon and helping to drive their stock prices higher.
“Along with more market-friendly policies, Trump’s win is also likely to lead to aggressive deregulation, with the combination driving stronger short-term gains across US equities, especially in sectors like industrials, financials and healthcare – all of which thrived during his first term. A Republican win will also likely mean less regulation and more support for fossil fuels, benefiting traditional energy companies and presenting a challenge to the renewable sector.
Photos: Trump hats, and a t-shirt at the NYSE
There are signs of support for Donald Trump on the US stock exchange trading floor today:
Euro on track for worst day since pandemic
The US dollar is continuing to strengthen, pushing the dollar index (the greenback against a basket of currencies) up by 1.8% today.
This has left the euro on track for its fourth worst day in the last nine years.
The euro has tumbled by two cents, or 1.87%, against the US dollar today to $1.0725, down from $1.093 last night, before US polls closed and the first election results came through.
That would be the euro’s biggest percentage fall since 19 March 2020, when it fell by 2.04% when the Covid-19 pandemic sparked a race into safe haven assets such as the dollar.
It lost 2.37% on 24 June 2016 after Britain voted to leave the European Union, and 1.88% on 14 June 2018, when the European Central Bank left interest rates at record lows.
As flagged earlier, US bank stocks are big beneficiaries of Donald Trump’s election win.
Goldman Sachs are the top riser on the Dow Jones industrial average, up 10.25%, followed by JPMorgan Chase who are up 8.6%.
US banks will benefit from higher interest rates, if the US Federal Reserve is now more reluctant to cut borrowing costs
They’re followed by construction equipment maker Caterpillar, up 6.3%,
Updated
Elon Musk's Tesla stake surges by $15bn
Shares in Tesla have surged by 14.5% in early trading.
That lifts them from $251.44 last night to $286.50 in early Wall Street trading today. That pushes up Tesla’s market capitalisation by around $112bn, from $807bn to $919bn.
This rally is a boost to Elon Musk’s wealth.
The value of his 12.8% stake in Tesla has risen from $103bn last night, to around $118bn, meaning Musk’s stake is worth about $15bn more than before the election result.
Having backed Trump during the election campaign, Musk could now benefit from the result, analysts say, perhaps if the next president imposes tariffs on electric vehicles made in China.
Trump has also pledged to form a government efficiency commission, led by Musk.
Small US stocks are also rallying, lifting the Russell 2000 index of smaller companies by 4% to the highest since 2021.
The decisive nature of Trump’s win appears to be driving the US stock market up.
David Morrison, senior market analyst at fintech and financial services provider Trade Nation, says:
Ahead of the vote, the major concern was that the result would be drawn out and disputed. This led to a jump in volatility and a sell-off across risk assets. As it happens, there has been no uncertainty.
Donald Trump looked like the clear winner within a few hours of the polls closing. US stock indices had already posted a strongly positive session on Tuesday, making back most of the losses from the end of last week. It appeared that many traders were convinced that the polls were understating the positive momentum which showed up in Trump’s numbers over the last fortnight. But it’s worth pondering whether the strength of the stock market rally is due to Trump winning, or relief that there’s a clear and uncontested result. In truth, it’s probably a bit of both.
Wall Street hits record high
Newsflash: The US stock market has opened at a new alltime high, as investors react to Donald Trump’s stunning electoral win.
Investors are racing into riskier assets, following the Republicans’ win in the race for the White House, and their taking. control of the Senate too.
Bloomberg TV are calling it a “face-ripping rally”
The S&P 500, the broad index of US stocks, has jumped by 1.9% to a new intraday high.
The Dow Jones industrial average, of 30 large US companies, jumped by 3% to 43,508 points, also hitting a record high.
The tech-focused Nasdaq is slightly lagging behind in the face-ripping stakes, up 1.8%.
Investors are betting that Trump’s economic policies will stimulate growth, and also inflation (as new tariffx, tax cuts and immigration curbs are all potentially inflationary).
Richard Flax, chief investment officer at Moneyfarm,
The resurgence of a newly empowered Trump—commanding strong support across the popular vote, the Senate, and the House—signals that this will be a pivotal presidency for at least the near term. With a more compliant Republican Party following the departure of sceptics, Trump is now positioned to govern more freely and in line with his vision.
We anticipate a return to core policies such as tax cuts and deregulation, coupled with Trump’s characteristic protectionist and isolationist stance—factors likely to influence everything from inflation to supply chain dynamics. The immediate market response reflects this, with a strengthening dollar, rising equity markets, and gains in Nasdaq 100 and S&P 500 futures. Additionally, the 10-year Treasury yield is pushing higher as investors adjust to expectations of these policies.
While we still expect the Fed to enact a rate cut this year, Trump’s anticipated inflationary pressures may lead the FOMC to take a more cautious, wait-and-see approach in early 2025, assessing the impact of the new administration before further action.”
Updated
Gold and silver had been seen as beneficiaries of the Trump trade in the run-up to the US election, but both are actually falling today.
The gold price has dropped by 2.7% to $2,669 per ounce, its lowest since mid-October.
Silver has dropped by over 5% to around $31 per ounce, also around a three-week low.
This will be partly due to the strength of the US currency (a strong dollar means you need fewer of them to buy a commodity).
Samer Hasn, senior market analyst at XS.com, says:
Gold is retreating significantly today, falling below $2,700 per ounce in spot trading at the peak of the declines, erasing November’s gains.
The drop in gold prices comes as the US dollar and Treasury yields are on track to record their biggest daily gain this year as Donald Trump returns to the White House for a second time.
Updated
Irish Prime Minister Simon Harris has warned that that the risk of a transatlantic trade shock is rising.
Harris made the comments shortly after congratulating Donald Trump on his election as U.S. president, Reuters reports.
⚠ IRISH PM SAYS RISK OF A TRANSATLANTIC TRADE SHOCK IS RISING
— PiQ (@PiQSuite) November 6, 2024
Harris was speaking in parliament in relation to his government’s policy of partly setting aside big budget surpluses. in a new sovereign wealth fund, saying it was doing so “at a time when the risk of a transatlantic trade shock is rising.”
Taoiseach Simon Harris has congratulated Donald Trump: “The people of the United States have spoken and Ireland will work to deepen and strengthen the historic and unbreakable bonds between our people and our nations in the years ahead.”https://t.co/DYMTbQqeSm
— The Irish Times (@IrishTimes) November 6, 2024
Soybeans are being hurt by the Trump election win.
Chicago soybean futures have fallen today by almost 2%, hit by fears that a new trade war with China could hurt US exports of the crop.
The strength of the US dollar also hurt agriculural products priced in the US currency.
Commodity data platform CM Navigator said in a note today:
“Not surprisingly, soybeans are under the most pressure, but wheat and corn are also down due to a rallying dollar.”
The strategy team at Danish bank Saxo say:
Grains trade lower, led by soybeans on fears that China’s countermeasures may hurt U.S. exports of key crops.
Professor Costas Milas, of the University of Liverpool’s management school, reminds us that Donald Trump 1.0 liked to conduct policy through posts on socia media.
The sequel may not be much different, professor Milas says:
Donald Trump’s victory raises the issue of whether future U.S. economic policy will run on social media. Just recall his tweet, dated 10 August 2018 when, as U.S. President, Trump suddenly announced the doubling of tariffs on steel and aluminum imports from Turkey.
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
The instantaneous result? The Turkish lira took a huge dive of 15.86%, sending shockwaves to the Turkish economy.
With almost 92.5 million followers on X, and ranked 9th in terms of popularity there, the burning question is whether President Trump will express thoughts and pursue economic policies via social media. Since X is owned by one of his most famous supporters, Elon Musk, Trump will arguably keep using, and perhaps more frequently, X.
If this happens, he is likely to generate, in an instantaneous manner, high economic volatility both at home and globally. All this, of course, remains to be seen.
Summary, at noon GMT
As clocks strike noon in the City of London, here’s a quick recap of events on a historic day.
Donald Trump’s resounding win over Kamala Harris in the US presidential race has triggered wild swings in the financial markets.
The dollar has surged by 1.6% against a basket of rival currencies, and on track for its best day since March 2020.
The rally has pushed the pound down by almost two cents today to $1.2856.
The euro has also weakened, down 2% to $1.0706, while Mexico’s peso has dropped to a two-year low.
Bitcoin, though, has hit a record high as traders anticipate a crypto-friendly White House.
Shares in the next president’s social media group, Trump Media & Technology Group, are on track to surge 36%.
Economists warned that Trump’s economic policies would be inflationary, leading to higher US interest rates than would otherwise be the case, strengthening the dollar, and boosting shares in US banks.
This has also hurt US government bond prices, driving up the yield on 10-year Treasury bills as investors anticipate interest rates will be higher than previously expected in coming years.
Julian Howard, chief multi-asset investment strategist at GAM Investments, says:
“In the short term, markets are reflecting what they see as the ‘Trump trade’. This means strong gains in US equity futures this morning given that the tax cuts of 2017 will presumably be extended for consumers and business owners. It also means gains in technology stocks since Mr. Trump’s significant backers include Elon Musk who is set to become the new administration’s efficiency czar.
“But it also means a firmer US dollar amid concerns that a booming US economy already nursing a significant budget deficit will run out of capacity and, along with the presumed imposition of tariffs, will drive up inflation and therefore rates too.
“US Treasuries concur, with real yields (growth expectations) rising and breakevens (inflation expectations) rocketing even faster, pushing the 10-year US Treasury yield up beyond a heady 4.4%. There are potentially implications for the US Federal Reserve which only recently cut rates by 50 basis points and meets again this week, but now faces a stronger economy and maybe even more future inflation as described.
The market-anticipated 50 bps cut may have to be revised, although the Fed will be at pains to stress that it doesn’t react to political events, only the data in front of it.
With the Republicans also taking control of the Senate, Trump now has a platform to implement policies such as tax cuts, tariffs on US imports, and tougher immigration controls.
The chair of the British foreign affairs committee Emily Thornberry has warned of the “chilling effect” a Donald Trump presidency will have on trade in EU, and the UK.
Commodity prices have weakened, on fears of a global trade war that would hurt global demand for industrial materials such as copper and iron ore.
There are ructions in the car industry following Trump’s win. Shares in electric car maker Tesla are now up 12% in pre-market trading, which could push up the value of Elon Musk’s stake by around $12bn.
But German carmakers’ shares are sliding, with tariff war fears wiping 7% off the value of Porsche and BMW
Updated
US banks shares higher in pre-market
US bank shares are set to pop higher when Wall Street opens.
Investment banking giant Goldman Sachs are up almost 8% in pre-market trading, while JP Morgan are 7.5% higher.
Banks should benefit from higher interest rates, if Trump’s economic policies prove to be inflationary.
They could also benefit from tax cuts, which would boost their earning and also help corporate clients.
German automakers hit by tariff threat
German carmakers’s share are being buffeted by Donald Trump’s election victory, and his threat to impose new tariffs on European imports to the US (see 9.54am for details).
Porsche are the biggest faller on Germany’s DAX share index, down 7.4%, followed by BMW (-7.2%), Mercedes-Benz (-5.6%) and Volkswagen (-4.8%).
Additional tariffs would hurt Germany’s automakers, which send more vehicles to the US than to any other country, points out Bloomberg, adding:
The market is increasingly lucrative for them because of robust demand for large sport utility vehicles and a slower shift to EVs than in Europe, allowing them to sell more of their higher-margin combustion-engine models.
The market turbulence created by Donald Trump’s election win isn’t expected to prevent a cut to UK borrowing costs tomorrow.
The money markets indicate there is a 97.5% chance that the Bank of England cuts UK interest rates by a quarter of one percentage point at noon on Thursday, taking rates down from 5% to 4.75%.
Updated
Donald Trump wins race to be president
It’s over! Donald Trump has been elected the 47th president of the United States, with Associated Press declaring he has reached the 270-electoral college vote threshold to return to office by winning Wisconsin.
It’s a stunning political resurrection that sent shockwaves through America and around the world, my colleague David Smith writes from Washington DC.
Trump becomes the first convicted criminal to win the White House. At 78 he is also the oldest person ever elected to the office.
The result will sound alarm bells in foreign capitals given Trump’s chaotic leadership style and overtures to authoritarians such as Vladimir Putin of Russia and Kim Jong-un of North Korea. He was branded a threat to democracy and even a fascist by his opponent, Vice-President Kamala Harris, and some of his own former White House officials.
Yet the American electorate proved willing to push such concerns aside and hand the nuclear codes to the property developer turned reality TV star for a second time.
Here’s the full story:
UK Clean technology business Ceres Power is also taking a hit from the US election. It’s shares are down 3.5%.
Ceres has developed a solid oxide electrolyser that can produce hydrogen from steam, as well asfuel cell technology which turns hydrogen and oxygen into electricity.
ITM Power, the Sheffield-based energy storage and clean fuel company, are down 6%.
European renewable energy company shares slide
Shares in some European renewable energy stocks have dropped today, after Donald Trump claimed victory in the US presidential election.
Nordex, which designs, sells and manufactures wind turbines, are down 6.4% in morning trading.
Vestas Wind Systems, the Danish wind turbine maker, have dropped by 8%.
Trump has pledged to boost US oil production and reportedly offered to tear up environmental regulations if oil companies supported his campaign, and has also called wind energy “bullshit” and “disgusting”.
German solar energy producer SMA Solar Technology are down 10.4%.
Updated
Mark Haefele, chief investment officer at UBS Global Wealth Management reckons today’s tumble in bond prices is excessive.
Haefele tells clients this morning:
“We think the bond sell-off has gone too far, expect the Fed to stay on a path toward lower rates, and like investment grade bonds.
We also expect further upside for gold and expect the US dollar to weaken from current highs over the medium term.”
Commodity prices hit by global trade war fears
Commodity traders began pricing in the likelihood of a Trump election victory overnight, causing the price of industrial metals and commodities to slump as fears of a “tit-for-tat global trade war” began to rise.
The Bloomberg Commodity Index lost close to one percent overnight as a “Trump 2.0” scenario became increasingly likely. A Trump election victory is expected to bring in US import tariffs, particularly targeting China, which could hurt global demand for industrial materials such as copper and iron ore.
Ole Hansen, the head of commodity trading at Saxo, said:
“The anticipation of strained trade relations has stoked concerns over future demand, with metals markets reacting strongly to the heightened uncertainty.”
Commodities are also understood to have traded lower due to rising strength of the US currency, which makes dollar-denominated trades more expensive on the global market. The global oil price slumped by almost 1.5% to just below $74.50 a barrel.
“Crude oil has also moved lower, pressured by the possibility that a tit-for-tat global trade war could dampen demand and add strain to an already weak market outlook projected for 2025,” Hansen explained, adding:
“This anticipated decline in demand for oil and related products stems from concerns that an increase in tariffs may slow global economic growth, thereby lowering demand for energy.”
Tesla shares up 13% in premarket
Elon Musk was one of Donald Trump’s more vocal supporters in the election, and investors reckon he’s going to reap the benefits.
Shares in Musk’s electric car market Tesla are up 13% in pre-market trading.
John Plassard, senior investment specialist at Mirabaud Group, says it’s worth keeping a very close eye on Tesla’s share price when Wall Street tradiing begins in 4.5 hours.
Plassard says:
Elon Musk’s presence on X (ex-Twitter) and in the media has made it impossible to dissociate him from Donald Trump’s presidential campaign. We dare imagine that the future government could give him a “helping hand” for certain new contracts.
The chair of the British foreign affairs committee Emily Thornberry has warned of the “chilling effect” a Donald Trump presidency will have on trade in EU, and the UK.
He has threatened tariffs of 20% on imports from Europe and up to 200% on Chinese imports.
Thornberry told BBC News:
“America is the country that we trade with the most after the European Union.
And so the threat of introducing pretty massive tariffs on imported goods – of 20% I think is what he started talking about; [and] 60% or 200% on Chinese goods - will obviously have a big effect on the American economy, but will also have a chilling effect on the British economy, because it is one of our biggest trading partners.
During the campaign Trump claimed the EU was not a good trading partner for the US, saying:
“They don’t take our cars, they don’t take our farm products, don’t take anything. You have a $312 billion deficit with the EU. You know, the EU is a mini – but not so mini – is a mini China.”
Ireland, which headquarters of nearly all the tech and pharmaceutical is also nervous about the impact of his promises to repatriate US companies through a new tax regime.
Ten multinationals including Microsoft, Apple and Pfizer account for 50% of Ireland’s corporate tax.
The EU is also concerned that massive tariffs on Chinese imports will fuel a wave of dumping in Europe, which remains one of the world’s biggest open markets.
Trump Media & Technology Group shares up 36% in premarket
Shares in Donald Trump’s social media empire have surged by over a third in pre-market trading.
Trump Media & Technology Group are up 36%, in the premarket.
They had a volatile day yesterday, dropping 12% at one stage before recovering to finish the day down just 1%.
$DJT soaring pic.twitter.com/0fZ3Uv5zXQ
— Joe Weisenthal (@TheStalwart) November 6, 2024
TMTG shares then jumped in after-hours trading after it surprised investors by reporting a heavy loss and a fall in sales in a surprise stock market filing last night.
Shares in Ferrexpo, the commodity trading and mining company which operates iron-ore mines and an iron ore pellet production facility in Ukraine, are soaring this morning.
Ferrexpo shares are up 30% at 80.7p, their highest level since February this year.
Just before Russia’s full-scale invasion of Ukraine, in February 2022, Ferrexpo shares were worth around £3 each, before plunging as the company’s exports were hit by disruption at Ukrainian ports.
Neil Wilson, analyst at Markets.com, says Ferrexpo is a “Ukraine peace play,”.
Trump has claimed in the past that he would establish peace between Ukraine and Russia within 24 hours if he won the election.
Last month, former British foreign secretary David Owen told Al Jazeera that if Trump won the election, “there is no doubt that it would be a fairly quick negotiation between Ukraine and Russia, and it would come up with a solution”.
Updated
The economic consequences of Mr Trump
Donald Trump’s victory will ensure a lower tax environment that should boost sentiment and spending in the near term, analysts at ING say.
However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term, they add.
In a research note this morning, ING say:
In the near term, the prospect of lower taxes and a pro-business environment should keep sentiment relatively firm and risk appetite buoyant. We have long argued that high-income households have been the key driver of consumer spending growth given inflation has been less of a constraint relative to low-income households, rising asset prices have boosted wealth and high interest rates have benefited them as they have been receiving 5%+ interest on money market funds while paying perhaps 3.5% or less for their mortgage. If these households keep more of their income, that should help support spending.
At the same time, a clean result with a smooth political transition to the new president will provide clarity and help support sentiment, and in a lower interest rate environment, it could improve economic prospects. For example, companies that delayed investment spending on election/regulatory uncertainty may now be prepared to start putting money to work.
However, the medium and longer-term growth prospects under his presidency are more uncertain. Reduced immigration and forced repatriation could become a major constraint on the US economy, particularly in industries such as agriculture. American-born worker numbers are falling and are a million lower than in 2019. The downtrend in US birthrates suggests little prospect of a demographic-driven turnaround. Employment growth is coming from foreign-born workers, who now make up 19.5% of all US employees. If the foreign-born workforce also shrinks, it could create significant supply-side challenges, driving up wages and inflation. To counteract this, productivity would need to increase substantially. Additionally, fewer active people in the country would mean reduced economic demand.
#Trump has declared victory in the 2024 elections.
— ING Economics (@ING_Economics) November 6, 2024
What does his win mean for the economy? A lower tax environment that should boost sentiment and spending in the near term. But promised tariffs, immigration controls and higher borrowing costs will become headwinds.
More… pic.twitter.com/90n83PBWPc
Updated
Analysts at Allianz Global Investors have predicted that many of Trump’s populist policies will “cause ripples”, even though they say “markets were largely priced for this outcome”.
In a research note this morning, Allianz GI predict tax cuts, tarifffs, geopolitical tensions and some volatility in the markets…
Donald Trump’s focus on lower corporate taxes and further de-regulation should favour US companies, particularly smaller businesses with attractive equity market valuations. To a certain extent, tech firms may benefit from their loyalty to Mr Trump.
While Republicans have likely won the Senate, a red sweep of Congress would enable him to push through tax cuts and higher spending – increasing the chances that credit markets are unsettled by unfunded fiscal largesse.
We think a Trump victory could carry more geopolitical risk than a Kamala Harris win because his geopolitical strategy involves an unpredictable approach to both his allies and foes. Expect higher trade tariffs with China and potentially some European nations.
Mr Trump’s likely tough stance on a range of issues ranging from trade to immigration may potentially boost the US dollar and gold. The impact on bond markets is more difficult to predict and we anticipate some volatility in equities until the results are finalised. If a Trump win is confirmed quickly, we can anticipate volatility to move lower as uncertainty is removed.
FTSE 100 jumps 1.3%
The London stock market is rallying in early trading.
The FTSE 100 share index has gained 110 points, or 1.36%, to 8283 points, the highest in over a week.
The weaker pound is lifting the share prices of multinational firms (as their dollar earnings are now more valuable in sterling terms).
Equipment rental company Ashtead, which benefits from a stronger US economy, are the top riser on the Footsie share index, up 6.6%, followed by Intercontinental Hotels (+5%), and manufacturing firm Rolls-Royce (+4.6%).
But housebuilder Persimmon is the top faller, down 3.8%, after warning that build cost inflation is beginning to emerge in price negotiations for 2025.
Persimmon’s road to recovery moves forward, private forward sales for the developer increased by 40% to £1.45bn. Tickets to ride also rose, up 5% on this time last year to c.£291,400 with incentives ticking over, averaging around 4-5%. Their outlook remains “optimistic” for 2025… pic.twitter.com/qL3Z97mt5t
— Emma Fildes (@emmafildes) November 6, 2024
Updated
US dollar enjoying its best day in four years.
The US dollar is on track for its biggest one-day rise since March 2020, having climbed by 1.5% against a basket of other currencies today.
Kyle Chapman, FX markets analyst at Ballinger Group, says:
“The dollar has rocketed across the board in its best day in four years, as markets position for an inflationary and tariff-heavy future for the US economy. With Georgia, North Carolina, and Pennsylvania having been picked up and the NYT projecting a >95% chance of a Trump victory, the market has moved to fully price in a win for the former president.
Chapman adds that the foreign exchange market for major currencies (“G10 FX” in City jargon) is “a bloodbath this morning”.
He explains:
The euro is the worst hit, with markets anticipating that the open, stagnant eurozone economy will face some of the biggest headwinds in staging a recovery. The ECB has become chiefly concerned about growth, and so the negative shock to its open economy should speed up the pace of rate cuts and set in stone a path to stimulative monetary conditions.
Meanwhile, the Canadian dollar has been spared much of the losses, presumably as markets expect a short-term US growth boost to spill over to its northern neighbour.
“If Trump genuinely follows through with his policy offering, this likely puts FX on a path of long-term depreciation throughout his presidency. It sets the stage for a higher neutral Fed funds rate, structurally hotter inflation, trade wars, tariff-based currency depreciation abroad, and lower global growth. In the worst-case scenario where he follows through on all his tax and trade policies, EUR/USD parity is a very probable prospect.”
US stock market futures on a charge
The US stock market is on track for sharp gains when Wall Street opens, in under seven hours (2.30pm GMT, or 9.30am New York time).
The S&P 500 share index is on track to jump 2%, according to the futures market, with the Russell 2000 index of small companies expected to rally even more sharply, by perhaps 5%.
🇺🇸RUSSELL 2000 FUTURES CONTINUE TO RISE, CURRENTLY UP 5.1%.
— CN Wire (@Sino_Market) November 6, 2024
S&P 500 FUTURES CONTINUE TO RISE, GAINING 2%; NASDAQ FUTURES INCREASE BY 1.7%.
Bartosz Sawicki, market analyst at fintech Conotoxia, says:
The bullish trend on Wall Street is likely to remain in place through the end of the year. In 2016, Trump’s unexpected win spurred the S&P 500 to rise around 15 percent within four months. However, a similar rally should not be expected this time.
While S&P 500 futures are up over 1.6 percent, investors elsewhere appear cautious, bearing in mind that lifting import tariffs is central to Trump’s economic agenda.
Nomura: It's bad news for Europe
Analysts at Japanese bank Nomura say “Trump 2.0 appears upon us”, and that’s “bad news for Europe”.
Nomura told clients:
Trump winning means tariffs which will adversely affect growth in Europe.
The European Commission is expected to retaliate like-for-like, which could mean higher inflation in the euro area – or, as manufacturing firms’ pricing power is so diminished, as we have been flagging for some time, firms could be forced to absorb these higher costs, which in turn may result in some firms shuttering and unemployment rising, thus weighing more heavily on growth.
Capital Economics: We may cut GDP forecast and raise inflation forecast, as Trump declares victory
Donald Trump is now declaring victory, having been declared the winner in Pennsylvania – putting him on the brink of crossing the 270-electoral vote threshold to become the next president.
Capital Economics have predicted that Trump could introduce his proposed immigration curbs and tariffs via executive action sometime in the second quarter of next year.
They told clients earlier this morning:
Given the slowdown in illegal immigration over the past few months, those curbs may have a slightly smaller impact on the economy than we previously believed but, at the same time, Trump has also been doubling-down on his tariff threats recently, particularly his threats aimed at Mexico.
It remains to be seen whether these tariffs (the 10% to 20% universal tariff and the 60% tariffs on China) can legally be implemented via executive action, whether Trump sees them as a negotiating tactic or a new semi-permanent revenue source, and whether any countries (Canada?) or particular goods (energy?) could be exempted.
As a working assumption, we are minded to reduce our GDP growth forecast between H2 2025 and H1 2026 by roughly 1% and add 1% to our inflation forecast over the same period. We will also probably raise our fed funds rate forecast by 50bp, meaning that the low next year will become 3.50% to 3.75%.
Updated
With the US dollar strengthening, commodity prices are falling.
The oil price has dropped by 1.4%, with Brent crude dipping to $74.47 per barrel.
Copper futures have dropped by 2%, Reuters reports.
The euro is having a torrid morning against the US dollar, sliding by 1.8%.
That knocks the euro down by two cents against the US dollar, sliding to $1.073 this morning from $1.093 last night.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
The euro – which is one of the most vulnerable major currencies to Trump presidency due to the tariff threat – tanked to 1.0718 against the greenback. Mexican peso – which is another currency highly vulnerable to a Trump win – is down by 3%.
The euro drops almost 2% due to fear of trade tariffs. pic.twitter.com/JjcN2pv16Q
— Holger Zschaepitz (@Schuldensuehner) November 6, 2024
Mexican peso hits two-year low
The Mexican peso has hit its lowest level in two years, on anticipation of a Trump victory.
The peso has tumbled by 3.5%, to 20.79 peso to the US dollar, the lowest level since August 2022.
It’s another casualty of the move into Trump trades, as the Republican has threatened to impose high tariffs on Mexican imports.
Updated
Pound drops by almost two cents
The pound has dropped towards its lowest level against the US dollar in two months.
Sterling has shed almost two cents against the dollar since the US election results started to come in, and has fallen to $1.2855, down from $1.3041 last night.
That’s only its lowest level in a week (since the pound dropped after the budget), but if it slips much further, it will be the lowest since mid-August.
Trump tariffs would halve UK growth and push up prices, says thinktank
A second Donald Trump presidency could be bad news for the UK economy, experts fear.
UK growth would be halved in the event Donald Trump wins the US presidential race and imposes the swingeing new tariffs he has threatened, a leading thinktank has warned.
The National Institute of Economic and Social Research (NIESR) said the protectionist measures planned by the Republican challenger for the White House would result in weaker activity, rising inflation and higher interest rates from the Bank of England.
Ahmet Kaya, a NIESR economist, said that, were Trump to go ahead with a 60% tariff on Chinese goods and a 10% tariff on goods from all other countries, the resulting trade war would lower UK growth by 0.7 percentage points and 0.5 percentage points in the first two years.
Kaya said:
“The UK is a small, open economy and would be one of the countries most affected.”
NIESR has estimated that over two years the UK inflation rate would be 3-4 points higher while interest rates would be 2-3 points higher.
More here:
US bond yields jump
US government bond yields (the interest rate on American debt) are also surging this morning.
With bond prices falling, the yield on 10-year Treasury bills has jumped by 12 basis points to 4.41%, the highest level since the start of July.
[Reminder: Bond yields rise when the price of the debt falls].
That suggests traders are anticipating that a Trump presidency would lead to higher inflation, and add to America’s already whopping fiscal deficit (leading to more Treasury bills being issued).
The 10-year Treasury yield surged to around 4.45% on speculation Trump’s proposed tax cuts and other spending plans would increase the fiscal deficit, while possible tariffs could reignite inflation.
— William (@pseudocrazy) November 6, 2024
Source: @CNBC#yields #fiscaldeficit #deficit #tariffs #inflation
Updated
Bitcoin leaps to record high as traders eye Trump victory
Bitcoin has surged to a record high today as investors react to signs that Donald Trump could be on track to win the US presidential election.
The world’s biggest cryptocurrency has gained more than 8% to hit $75,389, exceeding its previous peak in March.
Other crypro assets are also rallying, with ether up over 9%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains:
Elon Musk is a staunch supporter of President Trump and traders are assessing that a second Trump administration see a lighter touch in terms of regulation.
However, although a rally in tech may be on the way, trade tariffs could end up having negative consequences for the sector by potentially exacerbating trade tensions with China and disrupting international supply chains for key components.
Bitcoin has also rocketed to a record high as crypto fans expect a more supportive regulatory environment.
Introduction: US dollar soars as investors pile into Trump trades
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A turbulent day in the financial markets lies before us, as traders drive up the value of the dollar – and push down bond prices – as the US election results come in.
As counting continues, the odds of Donald Trump beating Kamala Harris to the White House have tumbled.
The Republican challenger has already won two crucial swing states – Georgia and North Carolina – with the remainder yet to be called.
It now appears the vice-president now cannot win the election without winning the state of Pennsylvania, in which Trump holds a lead, with 90% of the vote counted.
Trump’s early gains have triggered a surge in the value of the US dollar. The greenback has jumped by around 1.5% against a basket of currencies, including strong gains against the pound and the euro.
Dollar index futures rallied overnight on the news that Trump is leading so far... pic.twitter.com/Lv3BU6xrpy
— Rashad Hajiyev (@hajiyev_rashad) November 6, 2024
A Trump victory leads to a stronger dollar, in many traders’ view, because some of his key policies are inflationary. Tax cuts are stimulatory, while new tariffs on US imports would push up consumer prices, and curbs on immigration would lead to fewer workers and thus higher wages.
That environment, the theory goes, leads to higher inflation and thus higher interest rates.
Matthew Ryan, head of market strategy at global financial services firm Ebury, explains:
“The US dollar is trading higher against almost every currency in the world overnight on the news of the big outperformance in the polls from Donald Trump. Not only are markets positioning themselves for a comfortable Trump victory in the electoral college, but the prospect of a Republican controlled Congress, which is key in determining the ability of the incoming president to force policy changes through the US government.
“We’re seeing particularly large sell-offs in emerging market currencies, as investors price in higher US tariffs, elevated geopolitical risks and greater global uncertainty under a Trump presidency.
Democrats had been clinging to hopes throuh the night that they were seeing a Red Mirage – due to rural areas counting votes faster than urban ones – rather than a Red Wave. But Trump does seem to be performing well.
'Donald Trump is doing better everywhere'
— Sky News (@SkyNews) November 6, 2024
Sky US election data analyst and co-host of The News Agents podcast, @lewis_goodall breaks down the emerging voting patterns as counting continues
Live updates ➡️ https://t.co/bqQcireTu4
📺 Sky 501, Virgin 602, Freeview 233 and YouTube pic.twitter.com/5DvY8T6cvd
Investors have also been watching the results of congressional elections, to see who ends up controlling Capitol Hill.
And there the Republicans have already made significant gains, retaking the Senate.
It may take some days before we know the outcome for the House of Representatives, though.
Control of both houses allows a president to push through sweeping spending or tax policy shifts, while a divided government makes that process much harder.
Stephen Innes, managing partner at SPI Asset Management, explains:
A Trump White House with a Republican-led Congress could bring a growth surge fueled by tax cuts, deregulation, and big spending—though we’d also likely see higher inflation, steeper interest rates, and a tilt towards trade protectionism. Equities and the dollar would likely rally at first, driven by optimism around corporate earnings.
If Harris takes the presidency but Congress remains split, expect more of the status quo. With fewer bold moves, we’d see minimal economic or market impact. Meanwhile, a Trump win with a divided Congress could introduce a shaky path forward: trade tensions ramp up without the offsetting benefits of fresh tax cuts, adding a layer of uncertainty for equity markets.
The agenda
7am GMT: German factory orders for September
9am GMT: Eurozone services PMI for October
9.30am GMT: UK construction PMI for October
Noon GMT: The weekly US mortgage application data
2.30pm GMT: Treasury committee hearing with Rachel Reeves and top officials on the budget
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