TORONTO – U.S. stocks surged Wednesday after Republican candidate Donald Trump won the election, with the Dow Jones industrial average gaining 3.6 per cent, while Canadian markets rose by one per cent.
The day was marked by economic optimism, with plenty of the “Trump trades” — areas projected to do well under the new president’s policies — flying high, said Michael Greenberg, head of Americas portfolio management at Franklin Templeton Investment Solutions.
“We’re seeing things really quite buoyant on the stock market,” said Greenberg, including a strong U.S. dollar and lower bond yields.
Financial stocks rallied on expectations of deregulation, said Greenberg, with some Canadian banks participating as well to a lesser extent.
“You’re seeing just generally industrials, consumer discretionary, small caps working well. And that’s all from the view that under a Trump government, you will, to some degree or another, see lower taxes (and) higher tariffs, which in some cases could bring manufacturing jobs back to the U.S.,” he said.
In New York, the Dow Jones industrial average was up 1,508.05 points at 43,729.93. The S&P 500 index was up 146.28 points, or 2.5 per cent, at 5,929.04, while the Nasdaq composite was up 544.29 points, or three per cent, at 18,983.47.
“It looks like the 2016 playbook all over again,” John Zechner, chairman and lead equity manager at J. Zechner Associates, said in an email midway through the trading day.
In the U.S., financial heavyweights Goldman Sachs and JPMorgan Chase saw their share prices jump 13.1 per cent and 11.5 per cent, respectively.
Elon Musk’s Tesla was one of the big gainers Wednesday, up 14.8 per cent, while Trump Media & Technology Group was up six per cent.
Bitcoin also stormed higher, hitting an all-time high, as Trump has pledged to make the U.S. “the crypto capital of the planet.”
The big question is to what extent Trump’s campaign promises will be fulfilled, noted Greenberg.
“I think what we’re seeing is a lot of the … expected positives behind the administration are showing up in the stock prices today,” he said.
“I think the market’s trying to figure out what’s going to be good for Canada, what’s going to be bad for Canada,” added Greenberg.
A strong U.S. economy is usually a good thing for Canada, he said, but some sectors could face challenges amid heightened protectionism, such as forestry.
The S&P/TSX composite index closed up 249.55 points at 24,637.45, with broad gains partially offset by losses in telecom, utilities and healthcare stocks.
Canadian cannabis stocks plunged as efforts to legalize recreational cannabis in several states failed.
On Thursday, the U.S. Federal Reserve is expected to announce another cut to its key interest rate.
Greenberg said the Fed’s expected trajectory for rates is likely to continue in the short term, but given that some of Trump’s key policy promises could be inflationary, the central bank’s “neutral rate” could be a little higher than anticipated.
“The Fed may not need to cut as much as presumed,” he said.
The Canadian dollar traded for 71.76 cents US compared with 72.18 cents US on Tuesday.
The December crude oil contract was down 30 cents at US$71.69 per barreland the December natural gas contract was up eight cents at US$2.75 per mmBTU.
The December gold contract was down US$73.40 at $2,676.30 an ounceand the December copper contract was down 23 cents at US$4.25 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Nov. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
