Equities swing, bitcoin hits record as traders weigh Trump 2.0

Asian equities fluctuated Thursday, while the dollar held gains and bitcoin hit a fresh record as markets attempted to ascertain the consequences of a second Donald Trump presidency after he pledged to cut taxes and ramp up tariffs with an eye on China.

The so-called Trump Trade went into overdrive on Wednesday as it emerged that the tycoon would return to the White House after defeating Democrat Kamala Harris, while his Republican Party gained control of the Senate and looked set to retain the House of Representatives.

The decisive win is expected to pave the way for a series of business-friendly measures such as tax cuts and deregulation, though analysts warn that such moves—along with the pledge to impose duties on imports—could reignite inflation.

The prospect of higher inflationary pressure could complicate matters for Federal Reserve Chair Jerome Powell as he tries to guide the economy to a soft landing while bringing prices under control.

The central bank is expected to announce a 25-basis-point interest rate reduction on Thursday, but there are now questions over the likelihood of another cut next month and the outlook for the new year.

"Those discussions might have to wait until a subsequent meeting and encompass four issues," said Tapas Strickland of the National Australia Bank.

"Does the election result lead to meaningful changes for economic demand or inflation that warrant a different policy path? Have jitters about job-market deterioration been overstated? Where is inflation headed? And what is the right level for rates, anyway?"

Still, economists at Citi wrote in a client note ahead of Election Day: "The December rate cut decision will depend on labor market data, and we expect further softening to...