Benchmark stock indexes in Japan and Australia edged higher on Wednesday morning ahead of the US election and the US dollar rose against other currencies, the BBC reported. According to the report, the results of the election are expected to have a major impact on the global economy, especially in Asia.
A major reason for this focus on the election is the recent rise in the US stock market. The S&P 500, the country's leading stock index, has risen about 21 percent in 2024. The rise in the stock index is believed to be due to a strong economy, significant growth in corporate profits and a reduction in interest rates by the Federal Reserve.
Historically, U.S. stocks have performed well in the latter part of an election year, regardless of the party that wins, as investors take comfort in the clarity of the political situation. But this year, investors fear that if the margin is too narrow, market uncertainty will increase. Another concern is that the election could become contentious, as Trump did after his defeat to President Joe Biden in 2020.
This so-called Trump trade is showing some notable changes. For example, the Mexican currency, the peso, is falling in value. Because Trump's potential to impose tariffs could hurt Mexico's economy. At the same time, there are large fluctuations in the share price of Trump Media and Technology Group. The prices of regional banks and industrial enterprises like Bitcoin are increasing, which may benefit from the easing of regulations.
Treasury bond yields are also rising, and their relationship with bond prices is inverse. Inflation could increase due to Trump's policies.
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