Stocks, bond yields and Bitcoin rally on Trump victory day

U.S. stocks, bond yields and Bitcoin surged on Wednesday in response to former President Donald Trump's return to the White House, signaling investor confidence in the potential for growth-oriented policies under the Trump administration.

The Republican Party's control of the Senate further bolstered market optimism as traders bet on a Trump presidency that could lead to lower taxes and less regulation.

Ahead of Wall Street's open, U.S. stock futures pointed to strong gains. S&P 500 futures rose 1.23 percent, the Dow Jones Industrial Average gained 1.02 percent and Nasdaq Composite futures rose 1.43 percent. Meanwhile, Bitcoin hit a record high of $75,345.00 before declining slightly, reflecting strong enthusiasm in the cryptocurrency market.

Bond yields rise due to inflation expectations

U.S. bond yields also rose sharply, as the yield on the 10-year Treasury note rose to 4.4 percent from 4.28 percent on Tuesday.

This move suggests that investors expect higher inflation and growth under Trump's policies. Peter Esho of Esho Capital noted that the market is pricing in expectations for “higher growth and higher inflation,” adding that traders are trying to gauge the future impact of Trump's economic agenda.

The Trump administration is likely to bring significant changes to monetary policy, with potential consequences for trade and inflation. In European markets, the German DAX rose 1.3 percent, France's CAC 40 rose 1.9 percent and the UK's FTSE 100 climbed 1.4 percent.

The dollar is strengthening against major currencies

The dollar rose against several currencies, including the Mexican peso and the Chinese yuan, reflecting renewed tensions with China, a country on which Trump frequently imposes tariffs.

Robert Halver of Germany's Baader Bank noted, “With Donald Trump representing the economy, stock markets around the world can be expected to rise, with one exception: China,” predicting that the Trump administration will continue its trade pressure on Beijing become.

Markets around the world are closely watching Trump's trade policies as the reimposition of tariffs could have far-reaching implications, particularly for Chinese exporters. The dollar's renewed strength also led to gains against the yen and euro, adding momentum to the greenback's recovery.

China reacts as markets react

Asian markets reacted mixed to Trump's election victory. Japan's Nikkei 225 rose 2.6 percent while South Korea's Kospi fell 0.9 percent. Australia's S&P/ASX 200 rose 0.8 percent, but in Hong Kong the Hang Seng Index fell 2.2 percent as investors sought safe havens amid election uncertainty. The Shanghai Composite fell 0.1 percent.

Economic challenges remain in China as the government convenes the National People's Congress to address local debt and support fiscal policy. Prime Minister Li Qiang's recent positive comments on China's growth targets have bolstered market sentiment domestically, but Trump's victory could complicate that optimism, particularly given his proposed tariffs on Chinese imports.

In energy markets, the U.S. benchmark crude oil price fell to $71.09 a barrel and Brent crude fell to $74.53, reflecting volatile trading in response to the election results. Oil's outlook may remain under pressure as global markets react to the geopolitical changes expected under Trump's renewed leadership.

This article contains reporting from The Associated Press