The Trump rally kicks off - Live2newsLive2news

Republican presidential nominee and former U.S. President Donald Trump speaks at a campaign rally at Santander Arena in Reading, Pennsylvania, U.S., November 4, 2024.

Brian Snyder | Reuters

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Trump will be the 47th U.S. president
Republican presidential nominee Donald Trump will be elected the 47th president of the United States after defeating Democratic candidate Kamala Harris, according to NBC News. If Trump follows through with his campaign promises, he will enact tax cuts, mass deportations and heavy tariffs on imports.

Multiple record closes
All three key U.S. indexes surged on Wednesday, hitting all-time highs, on the back of a broad rally in the market. The 10-year Treasury yield jumped 14 basis points to 4.43%. Asia-Pacific markets were mostly higher on Thursday, though the Nikkei 225 fell around 0.4%.

Potential stimulus in response to tariffs
Trump has raised the idea of imposing a 60% tariff on Chinese imports. Should the plan come to fruition, that would dampen China’s exports and lower economic growth. The Chinese government might respond to that by introducing greater stimulus measures, said Yue Su, principal economist at the Economist Intelligence Unit.

Chinese exports soar
The threat of tariffs on China comes at a time when Chinese exports are rising sharply. In October, exports rose 12.7% from a year ago, in U.S. dollar terms. That’s the largest increase since March 2023, according to LSEG data, and better than the 5.2% expected in a Reuters poll. Imports fell 2.3% compared with the 1.5% forecast.

[PRO] Largest active ETF launches in Europe
This week, JPMorgan launched the world’s largest active exchange-traded fund in Europe. The ETF not only accumulates capital gains, but also returns income to investors. That helps the ETF ride out times of volatility – such as the present moment.

The bottom line

Donald Trump’s victory in the U.S. presidential elections is providing a tailwind to risk assets.

His support for “lower corporate tax rates, deregulation, and industrial policies that favor domestic growth” could boost the economy, which, in turn, will lift stocks, Marc Pinto, head of Americas equities at Janus Henderson Investors, wrote in a note.

Investors’ expectations on those fronts have already boosted the stock market. The Trump rally, in short, has begun.

Bank shares jumped on the back of prospective looser regulation in the sector, with many seeing double-digit rises.

So-called legacy automakers shares, like that of General Motors and Ford, had their engines juiced by Trump’s vow to roll back vehicle emissions standards and remove incentives for electric vehicles.

That’s bad for EV companies, but Tesla, which surged 14.8%, is an exception. CEO Elon Musk has been a strong supporter of Trump, and investors appear to think this relationship could be an asset to the company.

Meanwhile, bitcoin surged as much as 10% to hit $76,493.86 overnight, a new high for the cryptocurrency, as Trump had branded himself as a pro-crypto candidate.

The Trump victory lifted major U.S. indexes to new highs. The S&P 500 rose 2.53%, the Dow Jones Industrial Average popped 3.57% and the Nasdaq Composite advanced 2.95%.

To be sure, yesterday’s frenzy could have been a relief rally as much as a Trump rally.

“A decisive win removes the overhang of an unclear or a contested outcome. And that by itself clears some of the uncertainty and is helping that strong reaction we are seeing in the markets,” said Angelo Kourkafas, senior investment strategist at Edward Jones.

So it’s quite likely that as emotions and anticipation fade, so will the rally.

Besides, rising Treasury yields and potential universal tariffs are casting a shadow over markets, noted BMO Wealth Management Chief Investment Officer Yung-Yu Ma.