US Stock Futures Up Amid Trump’s Election Win: The Fed’s Next Move and Economic Impacts

In the wake of Donald Trump's stunning election victory, US stock futures are edging higher as investors digest the implications of his return to the White House. Wall Street, buoyed by optimism surrounding Trump's pro-business policies, soared to record highs on the heels of the election results. Meanwhile, all eyes are on the Federal Reserve, which is expected to announce a 25-basis point interest rate cut in its latest decision. Here's a closer look at the key developments shaping the markets.

1. US Stock Futures Push Higher as Trump Triumphs

On Thursday morning, US stock futures showed modest gains as investors weighed the outcome of the presidential election and braced for the Federal Reserve's interest rate decision. At 5:38 AM EDT, Dow futures had gained 78 points (0.18%), S&P 500 futures rose by 10.75 points (0.18%), and Nasdaq 100 futures climbed 44.25 points (0.21%).

The rally in US stock markets is largely driven by the aftermath of Donald Trump's overwhelming victory in the election. This marks a dramatic comeback for the Republican Party candidate, who will return for another four-year term, having lost to Joe Biden in 2020. Trump's election victory has sparked optimism in the markets, with "Trump trades" — assets historically tied to his political fortunes — seeing notable surges.

In particular, the US dollar surged by its largest margin in two years, and US Treasury yields climbed. Investors are betting that Trump's return will bolster stocks, increase inflationary pressures, and potentially slow the pace of future rate cuts. The cryptocurrency market also saw a notable uptick, with Bitcoin hitting an all-time high of $76,134, reflecting confidence in Trump's continued support for the crypto industry.

2. Kamala Harris Concedes, Calls for Unity

In a key moment of the transition process, Kamala Harris, the Democratic candidate who ran against Trump, formally conceded the race on Wednesday. In a speech in Washington, DC, Harris expressed her commitment to ensuring a "peaceful transfer of power," a significant and unifying gesture after the contentious election cycle.

While Harris urged her supporters to continue advocating for the values central to her campaign, such as the rule of law and the preservation of democratic norms, her remarks were notably conciliatory. She also confirmed she had spoken with Trump to congratulate him on his victory, highlighting the importance of moving forward as a unified nation.

This marks a stark contrast to the events following the 2020 election, when Trump refused to concede and questioned the legitimacy of the results. Despite the bitter campaign, both Harris and Trump emphasized the need to unite the country and work together moving forward.

3. Federal Reserve Prepares for Key Rate Decision

As markets continue to digest the election results, all eyes are now turning to the Federal Reserve. The central bank is expected to announce a 25-basis point reduction in its benchmark interest rate during its Thursday meeting, bringing the rate to a range of 4.75% to 5%. This anticipated cut comes after a series of previous rate reductions designed to support labor demand and address inflationary pressures that have been easing.

In September, the Fed made a more aggressive move, slashing rates by 50 basis points. Now, investors are keen to hear what Fed Chair Jerome Powell has to say about the future trajectory of interest rates. Futures contracts suggest the Fed could deliver an additional rate cut in December, though Trump's victory has created some uncertainty about the pace of future reductions.

Trump's win has shifted market expectations for 2025, with traders now betting that the Fed will slow its rate-cutting cycle and only enact two more cuts next year. This would bring rates down to a range of 3.75% to 4%, marking a more gradual retreat from the previous aggressive rate-cutting measures anticipated by many.

4. China’s Strong Exports Give Global Economy a Boost

In an encouraging sign for global growth, China reported a sharp increase in exports in October, far exceeding analysts’ expectations. According to customs data released on Thursday, China’s trade balance grew to $95.27 billion, up from $81.71 billion in September. This marked a notable uptick driven by a 12.7% year-on-year rise in exports.

The unexpected surge in exports was driven by strong overseas demand, which helped offset a decline in imports. With China’s trade balance coming in well above the forecasted surplus of $73.5 billion, the data signals a robust recovery in the world’s second-largest economy ahead of the upcoming winter season.

This growth in exports is seen as a positive indicator for the global economy, as it suggests resilient demand from overseas markets, despite ongoing geopolitical tensions and economic uncertainties. In addition, it hints that China’s production capacity remains strong, positioning the country as a key driver of global trade.

5. Oil Prices Dip Amid Mixed Sentiment on Trump’s Presidency

As markets react to the changing political landscape in the US, oil prices are seeing some volatility. On Thursday morning, Brent crude slipped by 0.3% to $74.69 per barrel, while US crude futures (WTI) fell 0.84% to $71.09 per barrel.

The decline in oil prices comes as traders assess the potential impact of a Trump presidency on global oil markets. On one hand, Trump’s previous tenure saw policies that favored oil and gas production, with pro-business initiatives that could increase demand for energy. On the other hand, market sentiment is being weighed down by a stronger US dollar and an increase in US crude inventories.

In addition, China’s expected fiscal stimulus measures, which could include more infrastructure spending to boost economic growth, are also playing into the equation. Should these measures materialize, they could help offset any negative impacts on demand, potentially providing a boost to oil prices later in the year.

Conclusion: Looking Ahead to a Year of Uncertainty and Opportunity

As the US stock market responds to Trump's victory with optimism, the coming months will likely be characterized by volatility and shifting expectations. The Federal Reserve’s decisions on interest rates, along with global economic factors like China’s trade performance, will continue to shape market sentiment.

For now, investors are cautiously optimistic about the future, with futures markets reflecting a sense of cautious optimism despite the uncertainties surrounding Trump’s second term. As always, the key to navigating these times will be staying informed, diversifying investments, and preparing for both opportunities and risks that lie ahead.