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The dollar and US stock futures saw gains in early Asia trading on Wednesday, following the initial results from the ongoing US presidential election.
Republican candidate Donald Trump won eight states, while Kamala Harris secured three and Washington, D.C., according to projections from Edison Research. Key battleground states remain undecided despite these early outcomes, leaving markets to react tentatively.
In the bond market, Treasury yields moved up as some betting sites indicated Trump could lead the election, aligning with market assumptions that his policies—such as restricted immigration, tax cuts, and increased tariffs—could heighten inflation and bolster bond yields.
For now, however, futures traders still appear confident that the Federal Reserve will implement a 25 basis point rate cut on Thursday.
Yields on 10-year Treasury notes rose to 4.351%, from 4.279% previously, while two-year yields edged up to 4.241%. Market participants speculate that a Trump win could cap the Fed’s ability to implement aggressive rate cuts, particularly if his policies push inflation expectations higher.
In the event of a divided Congress, however, fiscal policies may remain contained, which bondholders could see as a favourable outcome.
US stock futures reflected cautious optimism, with S&P 500 futures gaining 0.6% and Nasdaq futures up by 0.3%, as traders speculated on the potential for pro-market policies. European markets mirrored these moves, with Euro Stoxx 50 futures up 0.2%, Germany’s DAX futures rising 0.4%, and FTSE futures adding 0.3%.
See: The NAS100 futures chart shows a recent bullish trend with strong upward momentum, approaching a key resistance level around 20,571 after recovering from a low of 20,007 on the VT Markets app.
Energy markets showed a more cautious tone, with US crude declining 23 cents to $71.66 per barrel and Brent slipping 39 cents to $75.14. Traders appeared wary amid election uncertainties and a potential Gulf storm impacting US oil production.
See also: Oil Dips Ahead of US Election and China NPC
As the race continues, markets are likely to remain volatile, with a close eye on how election results could shape the economic landscape, particularly in the realms of dollar strength, bond yields, and fiscal policy.
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