Australian dollar sinks to 65.8 US cents, ASX to open steady
The local share market, meanwhile, is likely to have a relatively subdued start to its trading day.
ASX futures rose 0.1% to 8,216 points (practically flat).
It comes after yesterday’s solid rise of 0.8% on the ASX 200 index, as the US election vote count was pointing towards a Donald Trump victory.
The prospect of a Trump presidency, however, has led to the Australian dollar falling 0.8% to 65.8 US cents.
That’s because the US greenback surged on expectations Mr Trump’s policies (eg. trade wars with China and other nations, corporate tax cuts, larger budget deficits) will lead to interest rates remaining higher for longer.
Central banks are no longer expected to cut interest rates as aggressively.
Locally, money markets have delayed their bets on when the Reserve Bank will start cutting rates — from May to July 2025.
They’re also pricing in fewer rate cuts next year (40 basis points, instead of 50 basis points).
If you’re keen to know how a second Trump presidency might affect Australia’s economy (and its largest trading partner China), here’s an interesting analysis from Tom Lowrey:
Trump’s election win pushes Wall Street to new records, Tesla shares surge
Good morning! It’s going to be a very interesting day on markets, and I’ll be here to guide you through it.
There was rampant optimism on Wall Street, which hit new record highs after Donald Trump was declared the winner of the US Presidential election.
Mr Trump has promised to cut the US corporate tax rate to 15%(down from its current level of 21%), which would provide a significant boost to company profits.
It appears likely those tax cuts will be implemented, given the Republicans have already won a majority of seats in the US Senate, and are potentially on track to control the House of Representatives (which would deliver a “red sweep”).
By 3:30pm (local time), the Dow Jones index had surged 3.5% (or 1,472 points) to 43,705 points.
The last time the Dow jumped more than 1,000 points in one day was back in November 2022.
The S&P 500 also hit a new record, gaining 2.4% to 2,597 points.
The Nasdaq Composite rose 2.9% to 18,979 points, also its highest level ever.
Shares of Tesla leapt 13.6% as investors bet on the electric car maker benefiting from its billionaire CEO Elon Musk’s close ties with Mr Trump.
The US President-elect has said he would create a government efficiency commission, headed by Mr Musk, to cut federal spending.
Meanwhile, shares of Trump’s social media company Trump Media & Technology Group gained 3.6% to $US35.10 (after surging as much as 42% overnight).
The stock has halved in value since hitting a record high in March.
Market snapshot
- ASX futures: -0.1% to 8,202 points
- ASX 200 (Wednesday close): +0.8% to 8,199 points
- Australian dollar: -0.8% at 65.8 US cents
- Wall Street: Dow Jones (+3.5%), S&P 500 (+2.4%), Nasdaq (+2.8%)
- Europe: FTSE (-0.1%), DAX (-1.1%), Stoxx 600 (-0.5%)
- Spot gold: -2.8% to $US2,666/ounce
- Brent crude: -0.7% to $US75.02/barrel
- Iron ore: -2.1% to $US103.20/tonne
- Bitcoin: +9.3% to $US75,601
Price current around 7am AEDT
