By Wayne Cole
SYDNEY (Reuters) -U.S. stock futures and the dollar surged in Asia on Wednesday as investors wagered Republican Donald Trump could win the U.S. presidential election, though officially the race remained too early to call.
Trump defeated Democrat Kamala Harris in the battleground states of North Carolina and Georgia, taking him closer to completing a stunning political comeback four years after he left the White House.
S&P 500 futures and Nasdaq futures both climbed more than 1% as Wall Street looked forward to promised tax cuts and less corporate regulation.
European stocks were less enthused as Trump’s tariff policies, if enacted, could ignite a global trade war and threaten EU exports.
EUROSTOXX 50 futures lost 0.61%, while DAX futures dropped 0.55% and FTSE futures turned flat.
Treasury yields shot to four-month highs as some betting sites heavily favoured Trump, while The New York Time’s closely-watched swingometer projected a 93% chance of him winning.
Analysts generally assume Trump’s plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields, than Harris’ centre-left policies.
Trump’s proposals would also tend to push up the dollar and potentially limit how far U.S. interest rates might ultimately be lowered.
Thus while markets were still confident the Federal Reserve will cut interest rates by 25 basis points on Thursday., futures for next year eased into the red with December down 9 ticks.
“As the early results come in, even though none of them are that surprising, we are seeing Treasury yields rising a little bit, the dollar strengthening, bitcoin up; kind of a classic Trump trade,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Yields on 10-year Treasury notes jumped to a four-month high of 4.471%, breaking last week’s top of 4.388%. Two-year yields climbed to 4.312%, from 4.189% late in New York. [US/]
“If we look at the long end of the curve, that reflects the fact that both candidates are not exactly fiscal conservatives, they’re both willing to use the fiscal printing press,” said Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions.
“The biggest issue is if Trump or Harris are going to get full mandates,” he added. “If they don’t get blue or red sweeps, it limits the fiscal damage, and that’s the best outcome for bondholders.”
YUAN BUCKLES
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.68%, while Japan’s Nikkei rose 2.4% as the yen slid. [.N]
