How Are US Election Results Being Interpreted by the Markets? Latest Developments from Global Markets
The Republican takeover of the Senate in the U.S. elections and Donald Trump’s leadership in the presidential race have caused significant fluctuations in both national and international markets. The movement in global markets is felt across a wide spectrum, from the UK economy to China's monetary policies, emerging market currencies, and oil prices. Additionally, the interest rate policies of central banks worldwide and regulatory measures aimed at major tech companies play significant roles in this dynamic process.
Republicans Take Control of the U.S. Senate
In the recent elections in the U.S., Republicans achieved a major victory by taking control of the Senate, marking their return after four years. This change will allow Republicans to exert significant influence on the approval of the new president's cabinet and Supreme Court judges. The race for the House of Representatives is still ongoing, with reports indicating contests for over 100 seats.
According to estimates from The New York Times, Donald Trump is gaining a significant advantage by securing 301 electoral votes. Trump's early lead is also causing market fluctuations.
UK Economy Might Suffer from Potential Tariffs
The British think tank National Institute of Economic and Social Research stated that if Donald Trump wins the U.S. presidency and imposes tariffs, the UK economy could face a significant blow. In this scenario, the UK economy, which is already showing slow growth, could enter a tougher phase.
The report indicates that the UK’s economic growth may decline to 1.2% in 2025 and 1.1% in 2026. Even in the absence of tariffs, low growth rates are expected to continue.
“Trump’s Victory Could Negatively Impact Emerging Market Currencies”
BMI, part of Fitch Solutions, suggests that Donald Trump’s presidential victory might lead to waves of selling in emerging market currencies. Particularly, the Mexican peso is among the currencies expected to be most affected by this selling.
After Trump's surprise election victory in 2016, many currencies lost value against the dollar. This scenario is anticipated to recur, with the Mexican peso expected to decline by 9%. Protective economic policies may exert additional pressure on the peso.
Interest Rate Comments from BOJ and Bank of Canada
The Bank of Japan (BOJ) discussed the idea of a policy path projection, but there was no consensus among members on this issue. Minutes released on Wednesday cast doubt on the benefits of such a projection. Meanwhile, the Bank of Canada (BoC) expressed that there is no need for restrictive credit costs before deciding to lower interest rates.
The BoC cut its policy rate by 50 basis points to 3.75% in October. This move reflects confidence that inflationary pressures will ease and has garnered strong support within the interest rate-setting committee.
Chinese State Banks Take Action Against Dollar
Chinese state banks' efforts to prevent the rapid depreciation of the yuan by selling dollars have drawn attention. The peso has fallen over 1.2% against the dollar, reaching its lowest level of 7.1590 since August 16.
Such moves are regarded as part of policies aimed at maintaining the stability of the Chinese currency.
Impact of U.S. Elections on the Oil Market
Commonwealth Bank of Australia analyst Vivek Dhar indicated that the uncertainty created by the U.S. elections has made oil prices volatile. If Trump wins, re-imposing sanctions on Iran could lead to a decrease in oil exports and an increase in prices.
These dynamics illustrate that U.S. foreign policy continues to be a significant determining factor in the oil market.
Tesla Benefits from Trump’s Leadership
During Trump's early lead in the election, Tesla Inc (TSLA) shares gained value. The company saw an increase of over 8% overnight on the Robinhood trading platform. Tesla CEO Elon Musk previously mentioned that Republicans had a strong chance of a significant victory, which has influenced Tesla's market performance based on the election outcome.
Apple May Face Penalties Under EU’s Digital Markets Act
According to Reuters, Apple (AAPL) may be the first technology company penalized by the European Union under the Digital Markets Act (DMA). Allegations against Apple are expected to lead to a fine later this month.
The EU's move is seen as part of regulatory efforts aimed at curbing the power of major technology companies.