Stocks, $US surge as Trump wins race to White House

Major stock markets around the world rallied on Wednesday, while bitcoin hit a record high and the dollar was set for its biggest one-day jump since early 2023 as Republican Donald Trump was elected U.S. president.

US Treasury yields meanwhile rose to their highest levels since July as bond investors bet a Trump presidency could usher in tax cuts and tariff hikes that boost the deficit and inflation.

Trump, 78, recaptured the White House on Wednesday by securing more than the 270 Electoral College votes needed to win the presidency, Edison Research projected, following a campaign of dark rhetoric that deepened the polarization in the country.

US S&P and Nasdaq futures jumped more than two per cent, and those tracking the small cap Russell 2000 soared 6.2 per cent. The dollar index rallied 1.4 per cent and was set for its best day since March 2023.

The rally in US stock futures and signs of a decisive result cheered equity markets, with European shares up more than one per cent as stock investors put aside worries about the impact of potentially higher tariffs for now.

It was a different story in emerging markets, where Mexico's peso sank to its weakest level in over two years.

"The market is definitely moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for US companies," said Seema Shah, chief global strategist for Principal Asset Management in London.

"Across emerging markets, you can see China and Europe are struggling with the idea that they could face higher tariffs, and US bond yields higher with expectations for a higher fiscal deficit and inflation."

Money markets priced in lower European Central Bank rates meanwhile.

"For European businesses, Trump's return to the White House would mean considerable trade policy and geopolitical uncertainty, with negative implications for growth on the continent," said Berenberg chief economist Holger Schmieding.

Euro zone stock futures however rose sharply, tracking their US peers.

Japan's Nikkei surged over 2.5 per cent as the yen slid, while MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.9 per cent.

While markets were still confident the Federal Reserve will cut interest rates by 25 basis points on Thursday, futures for next year eased into the red.

Yields on 10-year Treasury notes jumped to a four-month high of around 4.47 per cent, from 4.279 per cent, breaking last week's top of 4.388 per cent. Two-year yields climbed to 4.31 per cent, from 4.189 per cent late in New York.

"If we look at the long end of the curve, that reflects the fact that both candidates are not exactly fiscal conservatives, they're both willing to use the fiscal printing press," said Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions.

In currency markets, the dollar index surged 1.5 per cent to 104.97 , the biggest daily rise since early 2023. The euro slid 1.7 per cent to $US1.0744, falling back from a one-month top of $US1.0937 struck overnight.

The dollar jumped 1.5 per cent on the Japanese yen to 153.89 yen , and further away from a low of 151.34.

Bitcoin climbed to a record high of $US75,397 and was last up seven per cent on the day. Trump is seen as more actively supportive of cryptocurrencies than Harris.

The dollar gained 1.0 per cent on the offshore yuan to 7.1726 yuan, sparking reports Chinese banks were selling dollars to slow the yuan's decline.

China is seen on the front line of tariff risk, and its currency in particular is trading on tenterhooks with implied volatility against the dollar around record highs.

Chinese stock markets have surged to almost one-month highs as investors expect a meeting of top policymakers in Beijing this week to approve local government debt refinancing and spending. Chinese blue chips lost early gains to turn flat.

Gold prices were choppy with a dip of 0.3 per cent to $US2,734 an ounce, off a recent record peak of 2,790.15.

The sharp rise in the dollar pressured oil prices, and other commodities, as it makes them more expensive when buying in other currencies.

US crude shed 1.35 per cent to $US71.03 per barrel, while Brent fell 1.4 per cent to $US74.47.