CNBC Daily Open: The Trump rally begins

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Trump will be the 47th U.S. president
Republican presidential nominee Donald Trump will be elected the 47th president of the United States after defeating Democratic candidate Kamala Harris, according to NBC News. If Trump follows through with his campaign promises, he will enact tax cuts, mass deportations and heavy tariffs on imports.

Multiple record closes
All three key U.S. indexes surged on Wednesday, hitting all-time highs, on the back of a broad rally in the market. The 10-year Treasury yield jumped 14 basis points to 4.43% as investors anticipate heavier spending by the U.S. government and a possible spike in inflation. Europe’s Stoxx 600 index retreated 0.54%.

Tesla surges, solar stocks drop
Tesla shares surged 14.8% as investors bet that Trump being in the White House would benefit major backer and Tesla CEO Elon Musk. However, solar stocks tanked on fears that Trump would slash tax credits for solar energy.

Tailwinds for crypto
Bitcoin surged as much as 10% to hit $76,493.86 overnight, a new high for the cryptocurrency. Shares of crypto companies such as Coinbase and MicroStrategy also popped. Crypto is riding high as Trump had branded himself as a pro-crypto candidate.

[PRO] Why small-caps are surging
The Russell 2000 popped 5.84%, its best daily performance in more than two years. While Trump’s proposed cuts to the corporate tax rate are widely seen to boost the overall stock markets, small-cap companies, in particular, will also benefit from a range of other factors related to a Trump presidency.

Donald Trump’s victory in the U.S. presidential elections is providing a tailwind to risk assets.

His support for “lower corporate tax rates, deregulation, and industrial policies that favor domestic growth” could boost the economy, which, in turn, will lift stocks, Marc Pinto, head of Americas equities at Janus Henderson Investors, wrote in a note.

Investors’ expectations on those fronts have already boosted the stock market. The Trump rally, in short, has begun.

Bank shares jumped on the back of prospective looser regulation in the sector, with many seeing double-digit rises.

So-called legacy automakers shares, like that of General Motors and Ford, had their engines juiced by Trump’s vow to roll back vehicle emissions standards and remove incentives for electric vehicles.

That’s bad for EV companies, but Tesla is an exception. CEO Elon Musk has been a strong supporter of Trump, and investors appear to think this relationship could be an asset to the company.

The Trump victory lifted major U.S. indexes to new highs. The S&P 500 rose 2.53%, the Dow Jones Industrial Average popped 3.57% and the Nasdaq Composite advanced 2.95%.

To be sure, yesterday’s frenzy could have been a relief rally as much as a Trump rally.

“A decisive win removes the overhang of an unclear or a contested outcome. And that by itself clears some of the uncertainty and is helping that strong reaction we are seeing in the markets,” said Edward Jones senior investment strategist Angelo Kourkafas.

So it’s quite likely that as emotions and anticipation fade, so will the rally.

Besides, rising Treasury yields and potential universal tariffs are casting a shadow over markets, noted BMO Wealth Management chief investment officer Yung-Yu Ma.

For now, however, the Trump rally is lighting up the markets.

— CNBC’s Jesse Pound, Scott Schnipper, Alex Harring, Yun Li and Jesse Pound contributed to this report.