Business World

Wednesday 7 December 2016

Markets plummet as Trump elected US president

Markets are reacting as though the four horsemen of the apocalypse just rode out of Trump Tower

Published 09/11/2016 | 05:39

Donald Trump
Donald Trump

Global stockmarkets have plunged as Donald Trump emerged victorious in the US presidential election this morning.

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His protectionist outlook and unpredictable nature have struck terror into investors, who dumped stocks and fled to commodity and currency safety zones including gold and the Japanese yen.

Ireland’s ISEQ Overall Index was 0.5pc soon after the open this morning, but regained ground soon after. It’s currently down about 0.2pc. The UK’s FTSE-100 is down 1pc.

Germany’s DAX was down 1.7pc in early trading today. France’s CAC-40 was 1.6pc lower. The Euro Stoxx 50 was nearly 2pc lower a short time ago.

Futures on the S&P 500 index sank 5pc.

Markets in Asia were the first to tumble overnight as Mr Trump took a lead in the divisive election.

But the contagion spread quickly, with futures in Europe and the United States indicating markets there were also set to plunge when they opened.

In his acceptance speech this morning, Mr Trump insisted that he would double America’s growth rate, rebuild its inner cities and its infrastructure, including roads, airports and hospitals.

The Mexican peso plummeted, with Mr Trump having pledged to build a wall between Mexico and the United States, and renegotiate trade deals with the country.

Mr Trump’s election caught investors off-guard, with polls and betting firms having predicted that Hillary Clinton would win. It’s the second time in just months that polls and betting firms have got the predicted result of a major political event woefully wrong. They had predicted that the UK would reject Brexit in June, when voters actually opted to leave the EU.

"Markets are reacting as though the four horsemen of the apocalypse just rode out of Trump Tower," said Sean Callow, a forex strategist at Westpac in Sydney.

"Or at least 3 of them - it might be 4 when the prospect of a clean sweep of Congress sinks in."

Japan's top currency diplomat signalled Tokyo's readiness to intervene if necessary as the surging yen threatened to snuff out its fragile economic recovery.

The scale of the scare was clear in the Mexican peso, which plunged more than 13pc against the dollar at one point in the biggest daily move in two decades.

"A lot of Trump's negative geopolitical rhetoric was concentrated around Mexico and trade with Mexico and tearing up the NAFTA agreement, so the peso just become this natural barometer of the election," said Deutsche Bank EM FX strategist Gautam Kalani.

Asian stocks skidded, with MSCI's broadest index of Asia-Pacific stocks outside Japan down 2.5pc and the Nikkei off a savage 5.4pc

Sovereign bonds flew ahead, pushing yields on 10-year US Treasury notes down as much as 12 basis points to 1.75pc, again the largest drop since Brexit.

In commodity markets, safe-haven gold climbed 3.5pc to $1,320 an ounce as the dollar slid.

Oil turned tail on concerns over the global economic outlook. US crude shed $1.30 to $43.68 a barrel at its lowest, while Brent fell $1.15 to $44.89 before it steadied and clawed back to just above $45 barrel.

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