Markets Right Now: European stocks open lower as Trump wins
Nov 10 2016 by Desiree Burns
World markets were very volatile through election night in the US, with stocks, currencies and bonds swinging wildly as investors factored in the reality that the Republican businessman could best Democrat Hillary Clinton in the 2016 presidential race. And Trump has attacked Mexico from Day 1 of his campaign.
"Traders have so many questions, but have so few answers and this is the flawless breeding ground for increased volatility..."
On Wall Street, health care sector companies led the gainers, surging 2.9 percent.
After initially sliding the maximum allowed, futures on the S&P 500 Index pared losses along with European equities, while the yen and gold scaled back gains. Dow and S&P futures also plunged.
The biggest loser as the news broke was the Mexican peso, which fell by 13 percent to historic a low against the dollar.
The US dollar has also scrambled back from an early-morning rout, and is now only slightly lower against the euro. Traders are selling bonds to hedge against the possibility that interest rates, which have been ultra-low for years, could rise steadily again under a Trump administration, said Tom di Galoma, managing director of trading at Seaport Global Securities.
"Given the surprising nature of Trump's victory and the lack of clarity surrounding whether many of his proposals can become reality, the roller coaster ride has already begun for financial markets". That puts the USA market on track for its biggest percentage decline since August 2011 when they plunged 5.5%.
Nothing concrete has happened yet, but the conversation will likely start soon on how American businesses trading overseas will function under a Trump presidency.
Investors, however, fear a Trump victory could cause global economic and trade turmoil and years of policy unpredictability, which among other things could discourage the Federal Reserve from raising interest rates in December as long expected.
"While Trump slightly soothed some concerns in his victory speech, uncertainty remains over what kind of a US he plans to lead", said Craig Erlam, senior market analyst at OANDA. The FTSE 100 index of leading British shares was 0.6 percent higher.
Gold enjoyed its biggest daily rally since the Brexit vote jumping five percent to $1,337 an ounce as investors rushed to safe-haven assets.
One currency that remains heavily sold is the Mexican peso.
Mexican President Enrique Pena Nieto congratulated on Wednesday the United States on its electoral process, expressing readiness to work with US President-elect Donald Trump to improve bilateral relations.
A key barometer of the election has been the value of the Mexican peso against the United States dollar. Trump's anti-Mexico rhetoric has affected the value of the peso for weeks. Citi's strategists said in an earlier note, "Uncertainty alone could hit the economy". But there are hopes that President Trump will be different than candidate Trump. Donald Trump would be well advised not to seal off the USA economy from the world. What that means is investors in American businesses are losing faith in how well they'd be able to function under Trump, and expressing that concern by selling their stocks.
Tokyo stocks fell, with Japan's Nikkei dropping more than 4 per cent, as Donald Trump's victory impacted Asian markets. South Korea's Kospi skidded 2.6 percent to 1,950.95 and Hong Kong's Hang Seng tumbled 2.3 percent to 22,382.27.
We've still got another two and a half months of an Obama presidency before Trump even gets to call the shots, so while it's worth keeping track of what these "global markets" are up to, it's also worth taking the speculation with a pinch of salt.