Stocks, bitcoin soar after Trump’s victory, while inflation worries rise; Dow surges 1,200

The US stock market, Elon Musk’s Tesla, banks and bitcoin are all storming higher on Wednesday as investors bet on what Donald Trump’s return to the White House will mean for the economy and the world. Among the losers the market sees: the value of the Mexican peso and potentially anyone worried about higher inflation.

The S&P 500 was jumping by 2.1 per cent in early trading and on track to top its all-time high set last month. The Dow Jones Industrial Average was up 1,292 points, or 3.1 per cent, as of 9:35am. Eastern time, while the Nasdaq composite was 2.1 per cent higher.

The US stock market has historically tended to rise regardless of which party wins the White House, with Democrats scoring bigger average gains since 1945. But Republican control could mean big shifts in the winners and losers underneath the surface, and investors are adding to bets built earlier on what the higher tariffs, lower tax rates and lighter regulation that Trump favours will mean.

“The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and higher inflation outlook,” Peter Esho of Esho Capital said.

“The rationale behind the US stock market rally is that Trump is seen as business-friendly and will be able to pass his tax cuts through easily without much resistance from the Democrats, who have lost control of the Senate,” said City Index and FOREX.com analyst Fawad Razaqzada.

Briefing.com analyst Patrick O’Hare said Trump’s policies, “which feature lower tax rates and deregulation among the cornerstones, are being heralded by the stock market as pro-growth policies that will be a boon for corporate profit growth”.