US stocks hit record highs on Wall Street and the dollar posted its biggest gain in eight years after Donald Trump was re-elected to the White House in a historic victory.
Bitcoin also hit a new all-time high, following President Trump’s campaign promise to prioritize volatile cryptocurrencies.
But investors expect President Trump’s tax cuts and tariff hike plans to lift inflation and slow the pace of interest rate cuts.
Higher interest rates over longer periods of time mean investors will earn better returns on savings and investments held in dollars.
Markets and currencies around the world moved sharply Wednesday following news of the U.S. election.
Major US stock indexes soared in afternoon trading, with banks performing particularly well.The dollar rose about 1.67% against a number of currencies, including the pound, euro and Japanese yen.The pound rose 1.17% against the US dollar. The FTSE 100 index, which is made up of the largest UK-listed companies, rose in early trading after falling to its lowest level in August, but Germany’s Dax index, France’s CAC 40 index, and stock indexes then closed slightly lower. In Japan, the benchmark Nikkei 225 stock index each closed up 2.6%, with the euro falling 1.8% against the dollar and its lowest since June. In mainland China, the Shanghai Composite Index ended 0.1% lower, while Hong Kong’s Hang Seng Index fell about 2.23%.
Bitcoin’s value rose $6,000 (£4,645) to an all-time high of $75,371.69.
President Trump’s stance on cryptocurrencies is in stark contrast to that of the Biden administration, which has led a thorough crackdown on crypto companies.
He vowed to make the United States the “Bitcoin superpower of the world.”
President Trump suggested during the campaign that he might fire Gary Gensler, chairman of the Securities and Exchange Commission, the U.S. regulator that has taken legal action against several crypto companies. .
President Trump also said he plans to appoint billionaire Elon Musk to audit government waste.
Musk has long been a supporter of cryptocurrencies, and his company Tesla famously invested $1.5 billion in Bitcoin in 2021, but the price of digital currencies is highly volatile.
Tesla’s Frankfurt-listed shares rose more than 14% on Wednesday. Musk, Tesla’s largest shareholder, has supported Trump throughout the election campaign.
But experts said there was turmoil elsewhere in financial markets in response to global uncertainty and President Trump’s potential economic plans.
Yields on U.S. Treasuries, the amount the government promises to pay buyers of its bonds, rose sharply on Wednesday.
Bonds are essentially debt instruments that can be traded on financial markets, and governments often sell bonds to investors when they want to borrow money.
The move could suggest investors expect higher borrowing under the new administration and are seeking higher returns on their funds.
Some economists have also warned that Trump’s proposals on trade would send a “shock” across the world, including the eurozone and the UK economy.
Prime Minister Rachel Reeves said the UK would make a “strong representation” to President-elect Donald Trump about the need for free and open global trade.
“The United States also benefits from access to free and open trade with the United States and other countries around the world, and the benefits of that open trade make us better off as a society.” “It becomes,” she said.
Donald Trump has said that if he becomes the next US president, he will significantly increase trade tariffs, especially against China.
Ahmet Kaya, chief economist at the National Institute of Economic and Social Research (Nisa), also said the UK could be “one of the countries most affected” under such a plan.
The report forecasts that the UK’s economic growth rate will slow to 0.4% in 2025, down from the forecast of 1.2%.
“Given his strong protectionist platform, which promises more aggressive tariffs on U.S. imports, President Trump’s global trade policy has a particularly strong impact on Asia,” said Katrina Ell, director of economic research at Moody’s Analytics. “It’s causing anxiety,” he said.
President Trump’s more isolationist stance on foreign policy also calls into question his desire to protect Taiwan from potential invasion from China.
The autonomous island is a major producer of computer chips essential to the technology that powers the global economy.
Investors have other important issues to watch this week.
The US Federal Reserve is expected to announce its latest decision on interest rates on Thursday.
Central Bank Governor Jerome Powell’s comments will be closely watched around the world.
