By Amanda Cooper

LONDON (Reuters) - Donald Trump's rapid confirmation as the next U.S. president propelled the dollar and punished the euro as investors bet on tariffs on imports affecting trade while tax cuts could benefit U.S. business.

U.S. stock futures rallied almost by the most in a year, while the dollar was set for its largest one-day jump since 2022. Bitcoin hit record highs and Treasuries were battered.

Trump's pledges to raise tariffs, cut taxes and slash regulations encouraged investors to dive into a range of assets that looked likely to benefit from such policies.

Markets that could suffer under tougher tariffs, including those in some of the United States' major trading partners, bore the brunt of the sell-off, pushing the Mexican peso to its lowest in over two years, while the euro was set for its largest one-day drop since March 2020.

Adding to the confidence in markets was Republicans winning control of the U.S. Senate, ensuring Trump's party will control at least one chamber of Congress next year, part of a potential so-called "Red sweep".

"It's extremely early days to be drawing conclusions about what a Trump presidency and potential clean sweep might mean for the U.S. and global economy and financial markets. Certainly, higher tariffs would involve greater inflation and less world trade growth," said Philip Shaw, chief economist at Investec.

"With stocks, one of the primary drivers is Trump's promise to reduce corporate taxes for companies that make goods in America. And obviously, we’ve seen a bit increase in U.S. stock futures and that’s carried through to European markets as well."

European stocks rallied, led by defence shares and banks, while renewable energy shares dropped.

The election could have far-reaching implications for tax and trade policy, as well as U.S. institutions. The outcome affects assets globally and could determine the outlook for U.S. debt, the strength of the dollar and a host of industries that make up the backbone of corporate America.

INTEREST RATES SEEN HIGHER

"The consequence is a higher path of rates," said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore. He was buying bank shares in anticipation that higher yields and stronger growth would benefit their earnings.

Investors sold U.S. Treasuries, partly on the expectation that higher tariffs would inevitably filter through to consumer prices, but also because Trump's promises on spending risk worsening the government's finances.