US Elections 2024: Stock markets rise and the euro falls as Trump declares victory

The euro plummeted against the US dollar after Donald Trump’s victory in the presidential elections. The currency fell almost 2 cents against the dollar to four-month lows at 8:40 CET. Meanwhile, the future points to a higher opening in the main European indices, including the pan-European Stoxx 600 and the German DAX, mirroring the movements on Wall Street.

The dollar rises, the euro and emerging currencies fall

Financial markets are experiencing high volatility as results approach, and the US dollar index has reached its highest level since July. This rise has put downward pressure on other G10 currencies and their emerging market counterparts. The dollar index soared 1.5%, marking its biggest rise since March 2020, when the pandemic began.

Weakness was especially evident in the euro, as factors such as the increase in tariffsanti-climatic policies and possible increases in interest rates in the US threaten the economic stability of the euro zone. A trade conflict between the US and the EU could worsen the region’s economic outlook, likely leading the European Central Bank to accelerate rate cuts.

Meanwhile, the escalation of geopolitical tensions between the US and China could further hamper Chinese economic growth and prolong sluggish consumer demand, impacting European exports to China, especially in the luxury goods sector.

“Europe is certainly not reacting to the news particularly well, with investors apparently somewhat spooked by the potential for tariffs and greater geopolitical uncertainty that a Trump presidency will likely bring,” Michael Brown, Senior Research Strategist at Pepperstone, wrote in an email.

Among emerging market currencies, The Mexican peso fell almost 3% against the dollar, marking its lowest level in two years, as traders hedge against the increasing probability of trade barriers between the United States and Mexico. In the same way, the Chinese yuan fell more than 1% against the dollar due to concerns about future trade relations between the US and China.

“A Republican clean sweep is possibly bad news for the rest of the world. Although many of the Republican policies are stimulating and popular in the US, the promise to immediately erect trade barriers is a global concern,” Michael McCarthy, market strategist and commercial director of Moomoo Australia, told ‘Euronews’.

Wall Street rises, bonds extend losses, bitcoin hits all-time high

US stocks are also rising on expectations of a Trump victory, with the S&P 500 approaching a new high. Trump’s promises to cut corporate taxes, relax tax policies and roll back regulations are likely to boost liquidity and benefit stock markets.

However, these policies raise concerns about rising inflation, rising public debt, and widening trade deficits, which could push the Federal Reserve to raise interest rateswith the consequent negative impact on the stock markets.

Government bonds are widening their losses as markets anticipate higher inflation and interest rates in the United States. The ‘Trump Trade’ has significantly influenced the rise in US Treasury yields, with expectations that his policies will push inflation higher, which would encourage the Fed to soften the pace of rate cuts. Bond yields, particularly shorter-term notes, typically reflect market expectations about changes in interest rates.

Bitcoin has also reached an all-time high above $75,000 (68,847 euros), as trade with Trump continues to fuel the cryptocurrency’s rally. Trump’s commitment to positioning the United States as “the crypto capital of the planet” has further fueled the rise of bitcoin, as it gains traction as a potential global financial force.

The price of gold plummeted as the need to hedge election risks continued to decline. Spot gold price fell $15 an ounce, to its lowest in two weeks.