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The stories that matter on money and politics in the race for the White House

US stocks rallied while bonds fell back as Americans headed to the polls in one of the most significant elections in recent memory, with sweeping implications for global markets.

Tuesday’s moves had echoes of the “Trump trades” of recent weeks in which investors bet on bitcoin and stocks and sold Treasuries. They had pared some of those positions on Monday following weekend polls that cast some doubt on Donald Trump’s chances of victory.

The Mexican peso, which typically weakens when Trump is seen to be doing well, hit its lowest level in two years at 20.35 against the dollar.

“The good news is that the wait for the US election is over, the bad news is that it will be a long night for volatility,” said Bob Savage, head of markets strategy and insights at BNY, who described Tuesday’s mood as “risk on . . . but timidly given the too-close-to-call uncertainty”.

By early afternoon in New York, the blue-chip S&P 500 was up 1.1 per cent while the tech-heavy Nasdaq Composite had gained 1.3 per cent.

Shares in Trump’s lossmaking social media group, Trump Media & Technology, jumped 14 per cent while bitcoin gained more than 4 per cent to trade just below $70,000.

However, the US dollar, which rose in October on expectations of a Trump win, slid to a two-week low against a basket of currencies, down 0.4 per cent on the day.

Wall Street has been preparing for a long night, pausing software updates and booking hotel rooms for suburb-dwelling traders among other logistics.

“There is a hyped-up sense of anticipation as we await the results,” said Mark Dowding, chief investment officer at RBC BlueBay Asset Management. “We all know how much is at stake on this election outcome, but until the polls close we won’t know which way to jump.”

Tuesday’s sell-off in Treasuries was boosted by unexpectedly strong US service sector data, pushing yields on benchmark 10-year notes to 4.34 per cent, up 0.03 percentage points on the day and close to Friday’s four-month peak of 4.39 per cent.

Investors are anxious that there might not be clarity on the winner of the election running into a critical couple of days for global markets, with interest rate-setting decisions from both the Federal Reserve and Bank of England due on Thursday.

William Vaughan, associate portfolio manager at Brandywine Global Investment Management, said the potential for an unclear election result by the time of the Fed meeting contributed “significant uncertainty”, highlighting the four-day wait until the Associated Press made its call on the winner of the 2020 election.

The Ice BofA Move index, a keenly watched gauge of investors’ expectations of future volatility in US Treasuries, on Monday hit its highest in more than a year as a mixture of political and interest rate uncertainty unsettled the $27tn market.

Analysts at UBS said levels implied by options on the S&P 500 index suggested the benchmark could swing sharply at the end of the week. The cost of buying protection against swings in exchange rates such as euro-dollar has also jumped.

The knife-edge election is being viewed as a potential watershed moment by investors. If Republicans were to win the White House and both houses of Congress, investors worry that Trump’s promised mixture of tariffs and tax cuts could feed inflation and put upward pressure on interest rates.

That has led to a rally in the dollar and a rise in longer-dated Treasury yields in recent weeks.

European stock markets moved off their lows as Wall Street rallied, leaving the regional benchmark Stoxx 600 index to recover earlier losses and close flat while the UK’s FTSE 100 ended down just 0.1 per cent.

Elsewhere, UK long-term borrowing costs touched a fresh high for the year, with 10-year yields at 4.54 per cent. That topped levels reached after last week’s Budget fed concerns on government borrowing levels.

Kamala Harris and Donald Trump raced across key battleground states in the final hours of campaigning in a last-ditch push for votes, as Americans prepared to head to the polls on Tuesday in one of the closest presidential elections in modern history.

The US vice-president said America was ready for a “fresh start” and claimed the momentum was with her as she held her final rally outside the Philadelphia Museum of Art in Pennsylvania, the biggest prize among the swing states that will decide the election.

“So America, it comes down to this. One more day, just one more day in the most consequential election of our lifetime. And the momentum is on our side,” Harris said.

Trump also campaigned in Pennsylvania, promising supporters in Pittsburgh a new “golden age” for the country if he were to win a second term in office.

The Republican former president later staged his final rally in Grand Rapids, Michigan, with a sprawling speech that ended past 2am.

“This is the last one,” he said of the event as he urged supporters to vote. “If we get out our people, it’s over, there’s nothing they can do about it . . . To make you feel a little guilty, we would only have you to blame.”

According to the Financial Times poll tracker, Harris holds a 1.5 percentage point lead over Trump nationally. But among the swing states, the vice-president has a narrow lead only in Michigan and Wisconsin, while Nevada is even and Trump has a small edge in Pennsylvania, North Carolina, Georgia and Arizona.

Senior Harris campaign officials said they were on track to win a close contest and believed undecided voters were moving to their side, but they also acknowledged that it could take days to get a final result.

“We are very focused on staying calm and confident throughout this period,” Jen O’ Malley Dillon, the Harris campaign chair, told reporters on Monday afternoon.

In the Lehigh Valley region of Pennsylvania, which has a large Puerto Rican community, Harris sought to boost her support among Latinos after a comedian at a Trump rally in New York made offensive comments about the Caribbean island and US territory last month.

“I don’t believe people who disagree with me are the enemy . . . we are fighting for a democracy right now,” she said.

Harris was supported by Alexandria Ocasio-Cortez, the progressive New York member of the House of Representatives, and by rapper Fat Joe, who attended the rally and urged Latinos to support Harris. “Where is your orgullo? Where is your pride?” the rapper said.

After days of vitriolic and angry campaign rallies that focused more on his grievances against his political foes and bizarre vows to “protect” women, Trump struggled to recalibrate his message on the economy and immigration.

In Reading, Pennsylvania, Trump spoke in front of female supporters holding up pink signs that read: “Women for Trump.”

In Pittsburgh, former Fox News host Megyn Kelly, with whom Trump openly feuded a few years ago, appeared at his rally to endorse him, while Joe Rogan, the podcaster with a large male following, also announced his support.

“A vote for Trump means your groceries will be cheaper . . . your pay cheques will be higher, your streets will be safer and cleaner, your communities will be richer and your future will be brighter than ever before,” Trump told the crowd in Pittsburgh.

Trump’s efforts to project a more positive message to voters were undermined when JD Vance, his running mate, called Harris rubbish during a campaign stop in Atlanta, Georgia, earlier in the day.

“In two days, we are going to take out the trash in Washington, DC, and the trash’s name is Kamala Harris,” JD Vance said.

In Grand Rapids, Trump called Harris a “very low IQ person” and a “radical left lunatic who destroyed San Francisco”.

Meanwhile, the first results of the election were released in the tiny hamlet of Dixville Notch, New Hampshire, shortly after midnight local time, with Trump winning three votes and Harris winning three.

Some people who attended Trump’s Pittsburgh rally had travelled long distances. Renée Hughes, a retiree, flew from Sitges, Spain, to vote and attend the rally in her hometown.

“We have to get our country back,” she said. “We have become an embarrassment. Trump is a real person. He gets us, the normal people, not the elites.”

Holly Gallogly, a retired teacher from Pittsburgh, on the other hand, said: “I voted for Trump in 2016 and 2020, but in the past few months I have moved to become undecided because I struggle with the hate rhetoric.”