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Dow Jones Forecast: DJIA hits a record high as Trump wins the Election

Article By: ,  Senior Market Analyst
November 6, 2024 9:54 AM

US futures

Dow future 3% at 43518

S&P futures 2% at 5897

Nasdaq futures 0.13% at 20636

In Europe

FTSE 0.04% at 8178

Dax -0.67% at 19131

  • Stocks surge as Trump wins with the possibility of a Red Sweep
  • Optimism of deregulation & lower taxes boosts stocks
  • Tesla jumps to a 2024 high
  • Oil falls amid a strong USD & on China demand worries

A Republican sweep is looking possible

U.S. stocks are at a record high after Donald Trump won the election to become the 47th president of the United States. Republicans are on course to take both the Senate and the House, pointing to the possibility of a Republican sweep.

Trump's decisive win and the possibility of a Republican sweep would give the former president a strong mandate and platform to implement his policies, including corporate tax cuts and deregulation. The prospect of these policies being implemented has boosted investor confidence, taking stocks to record levels, at least for now. Sectors such as banks and crypto are benefitting from this.

However, it's not all good news, as the Red Sweep will also give Trump a more straightforward path to applying trade tariffs, particularly to China, which could harm certain market sectors, such as chip makers.

Still, the clear outcome has ended the period of uncertainty for stocks and markets. Attention will now start turning towards tomorrow's Federal Reserve interest rate decision, where the central bank is widely expected to cut rates by 25 basis points at the conclusion of the meeting.

Given that the move is priced in the market, we will be closely watching Fed guidance given recent sticky US inflation.

Corporate news

Trump Media & Technology has surged 35% following the election results.

Crypto-related firms MicroStrategy and Coinbase are also soaring as Bitcoin hits an all-time high on optimism after Trump positioned himself as a pro-cryptocurrency supporter.

Tesla has jumped 14% as the EV maker was seen as a key beneficiary of a Trump win. CEO Elon Musk has been a major backer of the former President’s campaign.

Dow Jones forecast – technical analysis.

The Dow has seen a bullish reversal from last week’s low of 41,630, taking out the previous record high of 43,330 and reaching an all-time high of 43,630. While the price has eased back, buyers supported by the RSI above 50 will look to extend gains towards 44k. Minor support can be seen at 43,300 and 42,630, the September high. Sellers need a move below 41,800 to create a lower low.

FX markets – USD rises, EUR/USD slumps

The USD is surging, rising to its highest level since June on expectations that Trump's policies will be inflationary. The USD is tracking treasury yields higher on expectations that the increased inflationary pressures mean the Fed will adopt a more gradual pace to rate cuts.

EUR/USD has fallen over 2% in its worst daily performance since COVID-19. The EUR is one of the worst-performing major currencies due to U.S. dollar strength, on expectations of diverging ECB—Fed outlooks and worries over trade tariffs. The market has shrugged off data showing that the resume composite PMI was upwardly revised from the preliminary reading of 49.7 to 50.

GBP/USD  has fallen to 1.2850, the October low, as the USD shows no signs of slowing and ahead of the BoE and Fed rate decisions tomorrow. A breakthrough 1.2850 could expose the 200 SMA at 1.2810. Both the Fed and the BoE are expected to cut rates

Oil falls as the market weighs up a Trump Presidency.

Oil prices are dropping below $70.00 a barrel due to a stronger U.S. dollar following Trump's election win. The dollar has rallied to a four-month high, making oil more expensive for buyers with foreign currencies.

Furthermore, any Trump policies that could put further pressure on the Chinese economy could weaken oil demand. Tariffs would be negative for economic growth and, therefore, oil demand growth.

On the other hand, Trump could also renew sanctions on countries such as Iran and Venezuela, which would remove supply from the market.

Trump has little interest in renewables, which could be a positive for U.S. oil output growth.

 

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