Investing.com – US stock futures climb after equities on Wall Street soared to record highs in the wake of Donald Trump’s victory in the US presidential election. Trump’s Democratic opponent Kamala Harris formally concedes the race and says she will support a “peaceful transfer of power.” Meanwhile, the Federal Reserve is gearing up to unveil an anticipated 25-basis point interest rate reduction on Thursday, with Trump’s win clouding the outlook for cuts next year.
1. Futures higher
US stock futures edged higher on Thursday as investors assessed the outcome of the US presidential election and looked ahead to a key Federal Reserve interest rate decision.
By 03:47 ET (08:47 GMT), the Dow futures contract had added 72 points or 0.2%, S&P 500 futures had ticked up by 7 points or 0.1%, and Nasdaq 100 futures had risen by 33 points or 0.2%.
The main averages on Wall Street surged to a record high in the prior session after Republican Party candidate Donald Trump was elected as the 47th US president in an overwhelming victory. It was the culmination of a stunning turnaround for Trump, who will return to the White House for another four-year term despite being defeated by current President Joe Biden in 2020.
So-called “Trump trades” — or assets that have roughly tracked the former president’s chances of winning the race throughout the campaign — rallied. The US dollar spiked by the most in two years and US Treasury yields increased, as investors bet a Trump presidency would support stocks, place upward pressure on inflation, and slow the pace of rate cuts.
Bitcoin also hit an all-time peak of $76,134, reflecting optimism around Trump’s backing of the cryptocurrency industry.
2. Harris concedes to Trump
Trump’s Democratic Party rival Kamala Harris formally conceded the race on Wednesday, but urged her supporters to continue “the fight” for her central campaign issues like the rule of law and democratic norms.
Harris told a crowd in a speech in Washington, DC that they “must accept the results of the election,” adding she would help to ensure a “peaceful transfer of power.” Harris said she had spoken on the phone with Trump to congratulate him.
The comments, which stood in contrast to Trump’s decision never to concede to the outcome of the 2020 vote, brought an end a bitter campaign in which Harris had accused her opponent of posing a threat to the US democracy.
Trump’s campaign, meanwhile, said the two had agreed on the “importance of unifying the country.”
3. Fed decision ahead
The Federal Reserve is due to deliver a fresh interest rate decision on Thursday following a two-day meeting that was pushed back due to the election.
Markets are broadly pricing in a quarter-point borrowing cost reduction in the benchmark fed funds rate, which currently stands at a range of 4.75% to 5%. In September, the Fed slashed rates by an outsized 50 basis points in a bid to provide support to labor demand during a time of waning inflationary pressures.
Investors will be keen to hear if Fed Chair Jerome Powell will comment on the path ahead for rates this year. Futures contracts tied to the Fed’s policy rate are also factoring in an additional drawdown in December, although these wagers were somewhat dented following Trump’s victory.
Following the ballot, traders are now betting the Fed will roll out only two more cuts next year, bringing rates down to a band of 3.75% to 4%. In such an event, it would be the end of the Fed’s long-anticipated rate-cutting cycle roughly more than a year earlier than initially anticipated and a percentage point higher than the projections of many policymakers.
4. Chinese exports jump in October
China’s trade balance grew more than expected in October, as export growth blew past expectations on robust overseas demand and local production in the month prior to the US election, while imports shrank.
The country’s trade balance grew to $95.27 billion in October, customs data showed on Thursday. The reading was higher than expectations for a surplus of $73.5 billion and increased from $81.71 billion in September.
The figure was driven chiefly by a substantial uptick in exports, which grew 12.7% year-on-year in October. The rise was much higher than expectations for growth of 5%, and picked up sharply from 2.4% in the previous month.
5. Oil dips
Oil prices inched lower Thursday as traders digested the ramifications of a Donald Trump presidency and gauged hopes for more stimulus from top importer China.
By 03:48 ET, the Brent contract slipped 0.3% to $74.69 a barrel, while US crude futures (WTI) traded 0.5% lower at $71.33 per barrel.
The crude benchmarks had weakened during the previous session, weighed down by a surge in the dollar as well as a bigger-than-expected build in US inventories.
However, traders are now beginning to consider the potential for a Trump presidency squeezing oil supply from Iran and Venezuela, while his policies have tended to be pro-business, which likely supports overall economic growth and increases demand for fuel.
Additionally, China’s National People’s Congress is widely expected to outline plans for more fiscal spending in the coming months to boost economic growth.
