Market reacts to potential Republican sweep: shifts in Treasury yields and bitcoin surge
Financial markets are reacting strongly to the possibility of a Republican victory, with stocks, currency, and cryptocurrency seeing notable shifts.
Market reaction to potential Republican sweep
After stumbling on Monday following the release of weekend polls indicating a tight White House race, the market appears poised to invest in trades that could benefit from a Republican sweep.
Electoral college update
As the electoral college tally unfolds, Trump holds a significant lead over Harris. According to CNN, Trump has secured 211 votes, while Harris holds 153. The Associated Press reports Trump with 230 votes compared to Harris's 179.
With 270 votes needed for victory, key states like Wisconsin, Michigan, Pennsylvania, and Nevada remain too close to call.
Potential Republican policies
A Republican sweep could usher in notable policy changes, including Trump’s proposed 10% universal tariffs on most imports, affecting allies like the European Union (EU) and Japan. For Chinese imports, tariffs could escalate to 60% or more if he secures the presidency.
Fiscal expansion would likely follow a Republican sweep, with increased spending, lower taxes, and rising debt. Trump plans to make the 2017 personal tax cuts permanent and reduce the corporate tax rate to 15% for domestic manufacturers, which could further widen the deficit, currently at a significant 6% of gross domestic product (GDP).
Cryptocurrency and equities trends
The potential for a pro-crypto Republican administration has pushed bitcoin to a record high of $75,080, up 7.15%. Momentum suggests a run towards $80,000 could be within reach.
US equity futures are also trending up, with the S&P 500 gaining 1.20% to 5882, and the Nasdaq 100 adding 1.27% to 20,600.
Market movements
Markets are reacting in textbook fashion to these expectations.
- US 10-year Treasury yields have jumped 17 basis points (bp) to 4.44%, a four-month peak
- US dollar index (DXY) has surged 1.42% to 104.99, its highest level in four months
- USD/JPY has traded above 154.00 for the first time since July’s turbulence
- AUD/USD has fallen 1.8% to a three-month low of 0.6512, underlining its vulnerability to tariffs and the possibility of a trade war.
Provided the trend in voting observed during today’s Asian session continues in favour of Trump, we expect many of the moves highlighted above to extend into the sessions ahead. However, if the Democrats were to claw back lost ground, the US election could still bring a sting in the market’s tail.
AUD/USD daily chart
- Source: TradingView. The figures stated are as of 6 November 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.