Markets lean on 'Trump trade' as former president leads

U.S. stock futures and the dollar pushed higher while Treasury yields climbed and bitcoin rose -- all flagged by analysts and investors as trades that favor a Trump win over Democrat Kamala Harris.

"Our county by county analysis in key states suggests that Harris is lagging vs 2020, and on this basis it is logical that the market is starting to price a Trump win, as seen in bonds, and the dollar," said Jens Nordvig, CEO at analytical firm Exante.

The results so far underscore how one of the most unusual - and tightest - presidential elections in modern U.S. history could have far-reaching implications for tax and trade policy, as well as U.S. institutions.

The results affect assets globally and determine the outlook for U.S. debt, the strength of the dollar and a host of industries that make up the backbone of Corporate America.

Leading into Tuesday, polls showed a dead heat between the former president and the current vice president. But by 11 pm ET, Trump had won 211 Electoral College votes compared with 145 for Harris, with a third of the vote counted.

Republicans also won control of the U.S. Senate, ensuring they will dominate at least one chamber of Congress next year.

GROWING CONFIDENCE

Despite the uncertainty, popular election betting platforms leaned heavily in Trump's favor, while trades in assets whose prices could be influenced by Trump's pledges to raise tariffs, cut taxes and slash regulations showed growing bets on a Trump victory on Tuesday evening.

"The consequence is a higher path of rates," said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore. He was buying bank shares in anticipation that higher yields and stronger growth would benefit their earnings.

Bank stocks rose 4.4% in Tokyo .IBNKS.T and outperformed the market in Australia .AXFJ.

Shares of Trump Media and Technology Group surged 10% in extended trade after a volatile day session, while the Mexican peso, which could be hit by tariffs, sank to a two-year low, about 3% weaker than its closing price from the previous session. The euro also fell, fueled by worries that a Trump presidency could mean Europe faces trade tariffs and is forced to pay more for its defence.

Bitcoin surged to a record high in Asia trade, betting on a softer line on cryptocurrency regulation.

"Markets are growing confident that the election result will be called and that a ‘red sweep’ of Congress is possible," said Ben Emons, founder of Fedwatch Advisors in Washington.

Several investors said the results so far suggested markets would have clarity faster than in 2020, when Joe Biden was announced the victor some four days after election night.

"That's what markets have been most worried about, that there would be a long, drawn-out fight over who won," said Jamie Cox, managing partner at Harris Financial Group.

'VOLATILE NIGHT'

Elsewhere on Wall Street, some bankers, investors and analysts said they were waiting out the count - in some cases anxiously - with friends and family.

Alex Jaros, a former investment banker who now works in private credit in New York, was at a watch party at a bar organized by the New York Young Republican Club.

"It's looking very positive right now," even though the election has not been called conclusively, Jaros said.

The group sold 500 tickets for the packed event, which had a "busy, excited" atmosphere, Jaros said in an interview, as attendees chanted "U-S-A" in the background.

Joe McCann, CEO of Asymmetric, a macro hedge fund that trades primarily in cryptocurrencies, said he has been tracking election news on several TV screens and monitoring market movements in his 50th floor Miami penthouse.

"We have not left this room all day," he said. "We are expecting a volatile night."