US Elections: Tesla shares rise over 12% as Donald Trump wins

Following Donald Trump's victory in the US presidential election, Tesla shares rose over 12% in premarket trading.

In addition to Tesla, Trump's own media company, Trump Media & Technology Group, also rallied strongly, rising 30%, as domestic-focused small-cap stocks surged on expectations of favorable policies under a potential Trump administration.

The strong gains in Tesla shares were largely driven by investor sentiment surrounding CEO Elon Musk's vocal support for Donald Trump throughout his campaign. Musk, who has embraced Trump's pro-business stance, is expected to gain influence under Trump's administration, with Trump promising to consider Musk for a government efficiency commission if he is re-elected.

This alignment between the two influential figures has boosted investor confidence in Tesla's future under Trump's presidency, as favorable regulatory and tax conditions are expected.

S&P 500 and Dow futures rose to record highs on Wednesday, with the Dow gaining more than 1,200 points as markets anticipated possible corporate tax breaks, deregulation and economic measures to benefit U.S. companies.

The Russell 2000 Index also saw futures rise 5.6%, supported by confidence in pro-domestic manufacturing policies. Major financial stocks also rose sharply, with shares of major banks such as JPMorgan, Bank of America and Wells Fargo gaining between 5% and 6%, reflecting investor optimism about a looser regulatory environment.

In anticipation of a pro-business Trump presidency, cryptocurrency-related stocks benefited from Trump's pro-crypto stance.

Shares of Coinbase, MicroStrategy and Riot Platforms rose 11-14%, and Bitcoin hit a new record high. On the other hand, US renewable energy companies including NextEra Energy and First Solar fell 7.5% and 11%, respectively, as Trump's policy stance includes rolling back climate regulations introduced under the Biden administration.

Analysts noted that the market's strong reaction signaled confidence in Trump's economic policies.

“A Trump presidency would give markets the clarity they want, with policies that could boost growth through deregulation and potential tax breaks,” Hendrik Du Toit, CEO of Ninety One, told Reuters.

Heading into the Federal Reserve's two-day meeting, market attention also turned to possible interest rate cuts, with expectations that the Fed could cut interest rates by 25 basis points. However, investors' bets on a rate cut in December have fallen slightly from Monday's forecasts.