Shares in Tesla Inc (NASDAQ:TSLA) and most big US banks surged as US election results pointed to Donald Trump returning to the White House for a second term as president.
Trump was declared victor, the Associated Press reported on Wednesday morning, as the Republican party candidate reached the 270-electoral college vote threshold.
The reaction of the former president becoming only the second to serve two non-consecutive terms in financial markets was seen in S&P 500 futures rising 2.2%, futures for the Russell 2000 small cap index jumping 6% and Trump Media & Technology Group Corp (NASDAQ:DJT), the owner of the Truth Social social media platform, leapt over 37% higher in pre-market trading.
There was a 14% surge for Tesla, whose chief executive Elon Musk has been a vocal supporter during Trump's election campaign, leading to the Repub.
Investors are betting on Trump introducing tax cuts, deregulation and protectionist policies to help manufacturing, energy and defence sectors.
The banking sector was also clearly seen as a beneficiary, with pre-market gains of over 8% for Wells Fargo & Co (NYSE:WFC), Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C), while Morgan Stanley (NYSE:MS), JPMorgan Chase & Co (NYSE:JPM) and Goldman Sachs Group Inc (NYSE:GS) all vaulted over 7%.
Elsewhere in the financial sector, American Express Co advanced 5.1% pre-market, while Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V, ETR:3V64) both were up around 3.3%.
In the energy industry, Exxon Mobile and Chevron both climbed over 3%, while gains in the defence sector included 3% for Lockheed Martin Corp (NYSE:LMT) and 2.2% for Northrop Grumman Corp (NYSE:NOC, ETR:NTH).
The rise in US stock futures was noted by UBS chief investment officer Mark Haefele, who said it was "likely on anticipation of stronger domestic growth, increased M&A activity, and an extension to personal tax cuts".
With Trump having also campaigned for lower corporate taxes, he said "the prospect of a clearcut election outcome may also be driving futures higher, given reduced uncertainty about the future".
The US dollar strengthened by 2% against the euro to a six-month high, while US 10-year Treasury yields also rose, which the UBS analyst said was "in anticipation of higher nominal GDP growth and higher fiscal deficits".
With a possible increase in trade tariffs under a Trump presidency, the Hang Seng index was down over 2% each, while the Chinese yuan weakened 0.9%.
Trump's return to the White House should be "a boost for the US economy, but a strain on global stability", said John Plassard, senior investment specialist at Mirabaud Group.
"His 'America First' policy will revive the energy, defence and manufacturing sectors, boosting domestic investment. But beware: this protectionist approach could lead to higher inflation, while tariffs would increase production costs," Plassard added.
"The federal deficit, meanwhile, could widen further under the combined effect of tax cuts and increased military spending.
"On the geopolitical front, tensions are likely to intensify, especially with China and Iran, while transatlantic relations could become more transactional."
For Tesla, Plassard said Musk's presence on X, in the media and on the campaign trail closely associated him with Trump's presidential campaign and he felt "the future government could give him a 'helping hand' for certain new contracts".
Analysts at Wedbush highlighted that a Trump presidency would be an "overall negative for the EV industry" as likely the EV rebates/tax incentives get pulled, but for Tesla this is a "huge positive as it has scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players".
Trump could also accelerate some autonomous driving initiatives for Tesla and Alphabet-owned Waymo as well.