Markets Overview

  • ASX SPI 200 futures little changed at 8,210.00
  • Dow Average up 3.4% to 43,659.08
  • Aussie down 0.9% to 0.6580 per US$
  • US 10-year yield rose 15.6bps to 4.4275%
  • Australia 3-year bond yield rose 4.7 bps to 4.13%
  • Australia 10-year bond yield rose 6.4 bps to 4.63%
  • Gold spot down 2.8% to $2,667.06
  • Brent futures down 0.6% to $75.05/bbl

Economic Events

  • 09:00: (AU) RBA’s Bullock — Parliamentary Testimony
  • 10:30: (AU) Australia to Sell A$1 Billion 98-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 140-Day Bills
  • 11:30: (AU) Sept. Exports MoM, prior -0.2%
  • 11:30: (AU) Sept. Imports MoM, prior -0.2%
  • 11:30: (AU) Sept. International Trade Balance, est. A$5.27b, prior A$5.64b
  • 16:30: (AU) Oct. Foreign Reserves, prior A$94b

Stocks hit all-time highs, US yields jumped and the dollar saw its best day since 2022, with investors mapping out Donald Trump’s return to presidency and the potential for Republicans to win both houses of Congress.

The S&P 500 climbed 2.5% on bets the newly elected president will enact pro-growth policies that will boost Corporate America. The benchmark had its best post-Election Day in history, according to data compiled by Birinyi Associates Inc. and Bloomberg. A gauge of small caps rallied 5.8% amid speculation they will benefit from Trump’s protectionist stance, while wagers on lower taxes and reduced regulation lifted banks. Insurers focused on the Medicare market jumped on expectations the government will pay higher rates to companies that provide private versions of the US health program for seniors.

Wall Street’s “fear gauge” — the VIX — tumbled the most since August. Trading volume on stocks spiked. The Dow Jones Transportation Average jumped to a fresh high after a three-year drought of records, finally confirming the strength of its industrial counterpart. The breakout is a bullish sign to followers of an investing framework known as Dow Theory that says synchronized gains in both gauges portend better times ahead for the broad market.

“For now, investor sentiment is pro-growth, pro-deregulation, and pro-markets,” said David Bahnsen, chief investment officer at The Bahnsen Group. “There is also an assumption that M&A activity will pickup and that more tax cuts are coming or the existing ones will be extended. This creates a strong backdrop for stocks.”

Treasury yields climbed across the curve, with the move led by longer-term bonds as traders slashed wagers on the scope of rate cuts by the Federal Reserve. Investors have doubled down on bets for policies such as tax cuts and tariffs that could trigger price pressures. The moves also signal worries that Trump’s proposals will fuel the budget deficit and spur higher bond supply.

US 10-year yields advanced 17 basis points to 4.44%. A dollar gauge added 1.3%, with the yen leading losses in major currencies and the euro down 1.8%. The Mexican peso was almost flat after sinking as much as 3.5%. Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, hit a record high. Commodities came under pressure, with gold and copper tumbling. Oil edged lower.

“The biggest takeaway from last night is that we received certainty that the market craves,” said Ryan Grabinski at Strategas. “This will allow both business and consumer confidence to improve. Attention now should shift to the Fed meeting tomorrow. The 10-year is approaching the 4.5% level, that’s the level risk assets ran into some trouble in the last 24 months.”

The S&P 500 hovered near 5,930, notching its 48th record this year. The Nasdaq 100 added 2.7%. The Dow Jones Industrial Average climbed 3.6%. A gauge of the “Magnificent Seven” megacaps hit a fresh all-time high, led by Tesla Inc.’s 15% surge. Trump Media & Technology Group Corp. jumped 5.8%.

With many investors braced for a prolonged period of uncertainty, simply gaining some clarity on the outcome is providing a sigh of relief, according to Keith Lerner at Truist. He says the market currently appears more focused on the positive aspects of Trump’s agenda with less emphasis on the potential of tariffs and wider policy outcomes.

“Markets are pricing in most of the positives today, though the backdrop is complex, and rates, deficit concerns, the potential for fewer Fed rate cuts, and tariffs could eventually provide a counterbalance to today’s upside price shock, he noted. “Still, the weight of the evidence in our work indicates the bull market still has some longevity left, and we are sticking with the primary market uptrend.”

At Macquarie, Thierry Wizman says traders have to be mindful about pushing the “yield story much further.”

“If there’s a surprise coming from Trump in the next few months (at least relative to hyped-up expectations), it will be about fiscal restraint — rather than fiscal irresponsibility. When the market realizes this, long-term UST yields could stabilize or decline.”