US election 2024: Bitcoin hits all-time high, US dollar, yields and stocks up
The 2024 US presidential election has already started to significantly impact financial markets. Here's what traders should know about potential outcomes and market scenarios.
US election market impact: Trump expected to win
With Donald Trump expected to be nominated as the 47th president of the United States (US) with 277 out of 270 electoral votes versus 226 for vice president Kamala Harris (as of 5.00pm AEDT), financial markets are in a flurry.
Even before the Republicans took control of the US Senate, Bitcoin surpassed its March peak and reached an all-time high, and the US dollar, along with stock indices in overnight trading, surged by 1% while US Treasury yields rallied to new multi-month highs.
Republicans had 38 seats that were not up for re-election this season. According to AP projections, they have now won 13 of their Senate elections, giving them a 51-seat majority in the 100-seat chamber.
The majority switch was caused by the defeat of Democratic incumbent Sherrod Brown in Ohio and the victory of incumbent Republican Ted Cruz over Democratic challenger Colin Allred.
Early voting patterns suggest a competitive race
Trump has shown a stronger-than-expected performance in traditionally Democratic-leaning areas, although the final outcome remains uncertain. Market positioning reflects these early trends.
Harris’s path to victory appears to rely heavily on reclaiming key Midwest battleground states, including Michigan, Wisconsin, and Pennsylvania. Any shifts in these expectations could trigger significant market reversals. Traditional Democratic strongholds will need to hold firm for Harris to maintain a viable path to victory. This uncertainty is likely to continue to drive market volatility.
Anticipated Trump win impact on the US dollar
The US dollar has shown considerable strength, reflecting market expectations of potentially inflationary Trump policies. This has created opportunities across multiple trading platforms.
US dollar index daily candlestick chart
The Mexican peso has experienced particularly sharp moves, with USD/MXN rising over 3% as traders price in potential trade policy shifts. Forex trading volumes have spiked across major pairs.
USD/JPY has gained 1.4%, while other major currencies, including the euro, British pound, and Australian dollar, have all declined more than 1% against the greenback.
USD/JPY daily candlestick chart
The euro and British pound sterling also lost ground versus the greenback, with the latter approaching its October low at $1.2844, a fall through which may bring the August trough at $1.2665 into play.
GBP/USD daily candlestick chart
Cryptocurrency markets have also responded positively, with Bitcoin rallying by around 8% and reaching new highs on expectations of a crypto-friendly regulatory environment under Trump.
US Treasury markets show significant volatility
The broad dollar strength reflects market expectations of higher yields and potentially inflationary policies under a Trump administration. These moves echo patterns seen in previous election cycles.
Treasury markets have responded decisively to early election results, with yields surging significantly. The US 10-year Treasury yield jumped 20 basis points (bp) to 4.47%, a level last seen in early July, while the 2-year Treasury yield climbed 13 bp to 4.31%, a new three-month high.
US 10-year treasury daily candlestick chart
US futures march higher amid expectations of Trump win
US stock indices all traded higher by over 1% in overnight trading with small-cap equity futures outperforming broader markets, as traders position for potential 'America First' policies and deregulation. This echoes similar moves seen during the 2016 election.
The E-Mini Russell 2000 front month futures contract rallied by up to 3% in overnight trading to levels last traded in November 2021.
E-Mini Russell 2000 future weekly candlestick chart
Traders using CFD trading platforms have seen increased volatility across US equity indices.
Trading opportunities across multiple asset classes
Share dealing opportunities may emerge as different sectors react to potential policy shifts. Small-cap stocks have shown particular sensitivity to election developments. The surge in Treasury yields has created ripple effects across multiple markets, affecting everything from currency pairs to commodity trading.
Market participants should maintain careful position sizing given the potential for sharp reversals as final results emerge.
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