Economic Surge after Trump's Presidency Win: Dollar and Bitcoin Hit New Heights

The recent announcement of Donald Trump's presidential victory has led to a notable rise in the US dollar and Bitcoin, as markets respond to anticipated economic changes including tax cuts and tariffs. Experts warn of potential inflation but optimism remains among corporate entities.

The US dollar has experienced a sharp uptick as Donald Trump is projected to win the presidency and return to the White House. Bitcoin too has reached an unprecedented peak, fueled by traders' expectations of forthcoming tax reductions, heightened tariffs, and increased inflation during Trump's second term. The implications of this electoral outcome could be far-reaching for the global economy.

In addition to Trump's win, it appears the Republican Party will secure control of the Senate, although final votes are still being tallied. The dollar has risen approximately 1.5% against various currencies, notably the pound, euro, and Japanese yen. In Asia, Japan's Nikkei 225 concluded the session up by 2.6%, and Australia’s ASX 200 also rose by 0.8%. Major US stock indexes are predicted to open with substantial gains, buoyed by the previous day's performance where the Dow Jones Industrial Average, S&P 500, and Nasdaq all registered more than a 1% increase.

One factor contributing to Bitcoin's surge is Trump's pledge to establish the US as the "bitcoin and cryptocurrency capital of the world." The cryptocurrency's value leaped by $6,000 (£4,645), reaching a record high of $75,371.69, eclipsing its previous high of $73,797.98 from March. Trump has indicated plans to appoint billionaire Elon Musk to lead an initiative aimed at auditing governmental expenditures. Known for his support of cryptocurrencies, Musk's company, Tesla, made headlines in 2021 by investing $1.5 billion in Bitcoin, despite the volatile nature of its price.

Tesla's shares, listed in Frankfurt, surged over 14% following the news on Wednesday, with Musk being a staunch supporter of Trump throughout his campaign. However, analysts foresee a volatile trading day due to global uncertainty and Trump's contemplated economic policies. "Many of his measures will be inflationary and likely lead to increased bond yields, putting the Federal Reserve under pressure to manage interest rates," stated Lindsay James, an investment strategist at Quilter Investors.

Trump’s previous promises of significant increases in trade tariffs, particularly against China, have created a backdrop of concern across Asia, where fears of protectionist policies loom large. Economic research director Katrina Ell at Moody's Analytics indicated that Trump's isolationist foreign policy approach raises questions about his commitment to defending Taiwan from potential threats posed by China, particularly considering Taiwan's vital role in semiconductor production.

In mainland China, the Shanghai Composite Index slightly fell by 0.1%, while Hong Kong's Hang Seng Index dropped approximately 2.23%. While Trump's agenda for corporate tax cuts has received positive reactions from major US companies, experts caution that these measures might drive inflation further and mitigate the chances of interest rate cuts.

Investors are also on alert for key developments this week, particularly the US Federal Reserve’s upcoming interest rate announcement and comments from its leader, Jerome Powell, which are being closely monitored globally. Additionally, top Chinese officials are anticipated to provide insights into Beijing's strategies to address the ongoing economic slowdown in the world’s second-largest economy.