US Futures and Dollar Rise as Election Results Begin to Roll In

Image Credit: Reuters

 

U.S. stock futures and the dollar rose in Asian trading on Wednesday as early U.S. presidential election results showed a close race, keeping investors on edge.

Republican Donald Trump secured wins in eight states, while Democrat Kamala Harris took three states plus Washington, D.C., according to projections by Edison Research. Key battleground states, however, may not be decided for hours or even days.

Treasury yields increased as some betting sites leaned toward Trump, while futures markets maintained the expectation that the Federal Reserve would cut interest rates by 25 basis points on Thursday.

Analysts generally believe Trump’s policies, such as limited immigration, tax cuts, and significant tariffs, would likely boost inflation and bond yields more than Harris' center-left approach.

Trump's plans are also expected to strengthen the dollar and limit the Fed’s flexibility for future rate cuts. Reflecting this sentiment, Fed fund futures for next year declined, with November slipping 7 ticks.

"As the initial results come in, despite not being very surprising, we’re seeing Treasury yields tick up, the dollar strengthen, and a slight boost in bitcoin—typical of a ‘Trump trade,’” commented Brian Jacobsen, chief economist at Annex Wealth Management. "However, these moves seem tentative."

Yields on 10-year Treasury notes rose to 4.351%, up from 4.279% and nearing the four-month high of 4.388% reached last week. Two-year yields also climbed to 4.241%, from 4.189% in New York.

"At the long end of the yield curve, both candidates seem ready to use fiscal measures," noted Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions. "The biggest question is whether Trump or Harris will secure full mandates. Without a red or blue sweep, fiscal impact could be limited, which would favor bondholders."

Yuan and Global Markets React

S&P 500 futures advanced 0.6% in volatile trading, Nasdaq futures rose 0.3%, and EUROSTOXX 50 futures added 0.2%. DAX futures gained 0.4%, and FTSE futures were up 0.3%.

MSCI’s broad index of Asia-Pacific shares outside Japan held steady, while Japan's Nikkei climbed 1.2% as the yen softened, following Wall Street’s overnight rally.

In currency markets, the dollar index strengthened 0.8% to 104.19. The euro slipped 0.8% to $1.0834 after reaching a one-month high of $1.0937 overnight.

The dollar rose 0.8% to 152.86 yen, moving further from a low of 151.34, and increased 0.5% on the offshore yuan to 7.1375 yuan, as China remains vulnerable to tariff-related risks.

Chinese stocks hit near one-month highs as investors anticipated that Chinese policymakers would approve measures on local government debt refinancing. However, Chinese blue-chip shares dipped 0.2% in early trade on Wednesday.

Gold prices held steady at $2,744 an ounce, remaining below the recent record high of $2,790.15, influenced by a stronger dollar and higher bond yields.

Oil prices declined in early Asian trading as markets awaited election results. Crude had risen overnight as an approaching storm was expected to impact U.S. production in the Gulf of Mexico. U.S. crude fell 23 cents to $71.66 per barrel, while Brent lost 39 cents to $75.14.

 

 

 

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters all rights reserved by the original author.