Major stock markets around the world rallied on Wednesday, while bitcoin hit a record high and the dollar was set for its biggest one-day jump in four years as Donald Trump was elected U.S. president

Major stock markets around the world rallied on Wednesday, while bitcoin hit a record high and the dollar was set for its biggest one-day jump in four years as Donald Trump was elected U.S. president.

Small cap U.S. stocks in particular were boosted by expectations that a Trump presidency would offer tax cuts and support domestic companies.

Though bond investors dumped long-dated Treasuries, betting that accompanying tariff hikes would increase the deficit and inflation, causing the Federal Reserve to cut rates by less than they otherwise would have, and potentially raising fears about the United States' fiscal position.

Trump, 78, recaptured the White House in Tuesday's election following a campaign that deepened the polarization in the country.

U.S. S&P and Nasdaq futures jumped more than 2% ESc1, 1YMc1, and those tracking the small cap Russell 2000 RTYcv1 soared 6%. The dollar index =USD rallied 1.4% and was set for its best day since March 2023.

The rally in U.S. stock futures and signs of a decisive result cheered equity markets, with European shares up 0.9% .STOXX as stock investors put aside worries about the impact of potentially higher tariffs for now.

It was a different story in emerging markets, where Mexico's peso sank to its weakest level in over two years.

"The market is definitely moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for U.S. companies," said Seema Shah, chief global strategist for Principal Asset Management in London.

"Across emerging markets, you can see China and Europe are struggling with the idea that they could face higher tariffs, and U.S. bond yields higher with expectations for a higher fiscal deficit and inflation."

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