Global Markets Roiled As Trump Election Win Upends Forecasts

Global markets were thrown into disarray as Donald Trump won the U.S. presidential election, shocking traders after recent polls indicated that Hillary Clinton would be the victor.

Trump was projected to be the winner early Wednesday by the Associated Press and television networks after Wisconsin pushed him over the 270 Electoral College vote threshold needed to become president-elect. The Republicans also retained control of Congress. A Trump victory had been portrayed by analysts as having the potential to unhinge markets that were banking on a continuation of policies that coincided with the second-longest bull market in S&P 500 history. Brexit was the last major political shock and led to the U.S. equity gauge sliding 5.3 percent in two days. “A Trump win is expected to damage trade,” said James Butterfill, head of research and investment strategy at ETF Securities in London. “Traders are already expressing their worries through a depreciating dollar, which is bad news for European companies.” Most polls showed Democratic candidate Clinton ahead of Trump going into the vote and websites that took bets on the victor had put her odds of winning at 80 percent or more. Trump has pledged to clamp down on immigration to the U.S. and renegotiate free-trade agreements with countries including Mexico. Among key moves in financial markets:

  • S&P 500 Index futures slide as much as 5 percent
  • Stoxx Europe 600 Index sinks 2.2 percent
  • MSCI Asia Pacific Index drops 2.6 percent
  • Mexican peso tumbles as much as 12 percent, breaching 20 per dollar for first time
  • Japanese yen climbs versus all major currencies
  • Euro Swiss franc gain at least 0.7 percent against the dollar
  • Gold jumps 2.6 percent, most since Brexit
  • Crude oil slides 1.4 percent
  • 10-year U.S. Treasury yield drops three basis points to 1.82 percent
Stocks

S&P 500 futures tumbled by the maximum 5 percent loss permitted on the Chicago Mercantile Exchange before trading curbs are triggered, then pared their decline to 1.8 percent as of 8:10 a.m. in London. The restrictions last came into force in the wake of the Brexit vote and set a floor price for the contracts through the remainder of the overnight trading session. Equity indexes in Germany and France fell at least 1.5 percent. Benchmarks in India, Japan and New Zealand posted the biggest declines in the Asian region. Currencies Mexico’s peso plunged to a record 20.7818 per dollar and was the worst performer among currencies worldwide. Other higher-yielding currencies sank, with South Africa’s rand weakening 2.7 percent and South Korea’s won down 1.3 percent. Currencies viewed as havens strengthened, with the yen climbing 1.6 percent. Bonds Treasuries rallied as traders saw the likelihood of the Federal Reserve interest-rate increase in December dwindling to less than 50 percent, based on overnight indexed swaps. The yield on the 10-year note declined as much as 14 basis points before paring the drop. Its daily trading range — 0.18 percentage point — was the largest since June 24, the day after the Brexit vote.

German bunds also rose, with the 10-year yield falling to 0.15 percent, while Italian bonds slid. The cost of insuring corporate bonds in Europe jumped, with the iTraxx Europe Index of credit-default swaps on investment-grade companies up by the most since September and a high-yield gauge surging by the most since June, according to data compiled by Bloomberg. A measure of credit risk in Asia rose by the most in two months, according to prices from Nomura Holdings Inc. and data provider CMA. Commodities Gold jumped as much as 4.8 percent to $1,337.38 an ounce, spurring gains in shares of gold miners. Newcrest Mining Ltd., Australia’s biggest producer, surged 9.8 percent in Sydney. Crude oil dropped as much as 4.3 percent to $43.07 a barrel in New York, before paring losses to trade 1.3 percent lower. Five out of six major industrial metals declined on the London Metal Exchange, after the LMEX Index ended the last session at a one-year high amid optimism surrounding the outlook for demand in China. Aluminum and lead were the worst performers, with declines of 0.8 percent. Wheat, corn and soybean futures on the Chicago Board of Trade slumped more than 1 percent. The U.S. is the world’s largest exporter of corn and soybeans and Bloomberg Intelligence analyst Mike McGlone said a Trump win would put pressure on agricultural commodities because of his anti-trade sentiments. ‘GoldSafe provides regular commentary and analysis of gold, currencies and the global economy.  All articles published here are to inform, not influence.  Only you can decide the best place for your money, and any decision you make or don’t may put your money at risk.  GoldSafe’s fundamental strategy requires the ownership of physical gold and does not recommend gold derivatives, ETFs or any paper substitute.’