Market Report - 06/11/2024
Market reacts to Trump victory ; BoE rate cut expected
Donald Trump has been elected as the 47th of the United States following a stunning result overnight.
The Former President has defeated Democrat nominee Kamala Harris which results in Trump returning to the White House for his second term making him the first president to serve non-consecutive terms since Grover Cleveland, who was in office in the late 1800’s.
At 78 years old he will be the oldest person to ever be elected to the office with the American electorate choosing the ex-Property tycoon over Harris who would have been the first ever female president. Whilst in the lead up to the election the polls had both candidates neck and neck, Trump’s electoral votes total had exceeded the 270 mark that is required to win in the early hours of the morning, with some projections suggesting he could end up with 315 votes in total.
In the immediate aftermath, the US dollar has reacted well and strengthened against major currencies with GBPUSD dropping nearly 1.5% and EURUSD dropping from the 1.09’s to the low 1.07’s. In European stock markets, German carmakers shares are taking a hit as a result of Trump’s promise to impose new tariffs on European imports to the States, with Porsche, Mercedes, Volkswagen, and BMW all suffering. Meanwhile, premarket in the US is showing shares in major banks are up nearly 8% in some cases and Tesla is up 13%.
Further volatility is expected over the next 24 hours as markets continue to process the election results, with additional focus on tomorrow’s meetings of both the Bank of England and US Federal Reserve. Here in the UK, the volatility seen so far from Trump’s win isn’t predicted to impact plans to cut interest rates when the MPC minutes are released. With markets still indicating there is a 97.5% chance that the Bank of England cuts by 25bps at midday on Thursday, which would in turn bring borrowing rates down from 5% to 4.75%.