US elections: Tesla shares surge over 12% as Donald Trump wins

The sharp gains in Tesla shares were largely driven by investor sentiment around CEO Elon Musk's vocal support for Donald Trump throughout his campaign.

In Short

• Tesla shares rally, driven by Elon Musk's support for Donald Trump
• Trump Media & Technology surges 30%
• Bitcoin hits record high; Coinbase, MicroStrategy stocks rise sharply

Tesla shares surged over 12% in premarket trading following Donald Trump’s victory in the US presidential election.

In addition to Tesla, Trump's own media company, Trump Media & Technology Group, rallied sharply, rising 30% as small-cap, domestic-focused stocks surged amid expectations of favourable policies under a potential Trump administration.

The sharp gains in Tesla shares were largely driven by investor sentiment around CEO Elon Musk’s vocal support for Donald Trump throughout his campaign. Musk, who has aligned himself with Trump's pro-business stance, stands to gain influence under Trump’s administration, with Trump promising to consider Musk for a government efficiency commission if re-elected.

This alignment between the two influential figures has boosted investor confidence in Tesla’s future under a Trump presidency, with expectations of favorable regulatory and tax conditions.

The S&P 500 and Dow futures soared to record highs on Wednesday, with the Dow up more than 1,200 points as markets anticipated possible corporate tax relief, deregulation, and economic measures favoring U.S.-focused companies.

The Russell 2000 Index also saw futures climb 5.6%, bolstered by confidence in pro-domestic production policies. Key financial stocks rose sharply as well, with shares of major banks such as JPMorgan, Bank of America, and Wells Fargo up between 5% and 6%, riding on investor optimism for a lighter regulatory environment.

In anticipation of a pro-business Trump presidency, cryptocurrency-related stocks benefited from Trump's pro-crypto stance.

Shares of Coinbase, MicroStrategy, and Riot Platforms jumped by 11-14%, and bitcoin reached a new record high. On the other hand, U.S. renewable energy companies, including NextEra Energy and First Solar, fell by 7.5% and 11%, respectively, as Trump's policy stance includes rolling back climate regulations established under the Biden administration.

Analysts noted that the market's strong response signalled confidence in Trump’s economic policies.

“A Trump presidency would give markets the clarity they crave, with policies that may drive growth through deregulation and potential tax relief," said Hendrik Du Toit, CEO of Ninety One, told news agency Reuters.

As the Federal Reserve’s two-day meeting began, market attention also turned to potential interest rate cuts, with expectations that the Fed may lower the benchmark rate by 25 basis points. However, investor bets on a December rate cut fell slightly from Monday’s projections.