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- The Dow Jones reached a new record high after Trump looks set to beat Harris into the White House.
- A decisive election result is tipping stocks into a frenzy on hopes for deregulation.
- The Dow Jones is up 3.6% for the week with banking stocks charging to the top.
The Dow Jones Industrial Average (DJIA) surged to a fresh record on Wednesday, climbing into 43,700 after US presidential candidate looks set to sweep a victory away from Democratic nominee and current Vice President Kamala Harris. Equities are surging on expectations of stock-friendly moves from future President Donald Trump, specifically hopes for further deregulation in the banking sector.
The US presidential election still isn’t over, and some key battlegrounds will take some time before a final call is made, but markets are confident that the outcome has been decided, with Republican candidate and former President Donald Trump set to win 276 electoral votes. With the Republicans also set to win back both the US Senate and Congress, investors are anticipating a pro-growth environment with more deregulation as well as additional or extended business tax cuts.
Dow Jones news
About two-thirds of the Dow Jones board is tilted into the green on Wednesday. Companies burdened with physical inventories and logistics like Home Depot (HD) and Nike (NKE) were left out of the post-election spluge, with Home Depot falling nearly 4% to $385 per share and Nike backsliding 3.5% to $75 per share.
On the top end, Goldman Sachs (GS) and JPMorgan Chase (JPM) both hit the upper atmosphere, climbing over 12% and 10%, respectively. Goldman Sachs is knocking on $595 per share, with JPMorgan Chase stretching past $245 per share.
Dow Jones price forecast
A firm bullish tilt to the Dow Jones daily candlesticks leaves short sellers with lots of potential but few opportunities. The DJIA has stretched firmly into fresh record territory north of 43,600, but a lack of meaningful technical signs for a turnaround leaves timing a short entry a hazardous process.
A downside snap as equity traders cool their jets after the election results could easily send price action back to the 50-day Exponential Moving Average (EMA) near 41,970. However, short pressure will first need to drag bids back to planet earth near 43,200.
Dow Jones daily chart
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.