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Trump victory rocks markets

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

Futures on the S&P 500 Index plunged by a 5% limit that triggers trading curbs and contracts on European equities sank more than 4%. Gold had its biggest move since the aftermath of Britain’s shock vote to leave the European Union, surging with haven assets including the yen and sovereign bonds. Mexico’s peso tumbled the most since 2008 amid concern US trade policies will become more protectionist under Trump.

Trump was projected to be the winner early on 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 US equity gauge sliding 5.3% 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% or more. Trump has pledged to clamp down on immigration to the US and renegotiate free-trade agreements with countries including Mexico.

WATCH: Trump outlines policies

Among key moves in financial markets:

S&P 500 Index futures slide as much as 5%; Euro Stoxx 50 futures sink 4.3%; MSCI Asia Pacific Index drops 2.6%; Mexican peso tumbles as much as 12%, breaching 20 per dollar for first time; Japanese yen climbs versus all major currencies; euro, Swiss franc rise at least 1.2% against the dollar; gold jumps 3.3%, the most since Brexit; crude oil slides 1.4%; 10-year US Treasury yield drops three basis points to 1.82%.

Stocks

S&P 500 futures tumbled by the maximum 5% loss permitted on the Chicago Mercantile Exchange before trading curbs are triggered, then pared their decline to 3.4% as of 07:51 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.

Futures on equity indexes in the UK, Germany and France fell at least 2.7%. 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 the rand weakening 2.7% and South Korea’s won down 1.3%. Russia’s rouble slipped 0.2%.

“This would be the biggest political upset in living memory,” said Jeremy Cook, chief economist at London-based World First. “The significance is almost unquantifiable.”

Currencies viewed as havens strengthened, with the yen climbing 2.4%.

Bonds

Treasuries rallied as traders saw the likelihood of the Federal Reserve interest-rate increase in December dwindling to less than 50%, 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 0.11%, 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 and data provider CMA.

Commodities

Gold jumped as much as 4.8% to $1 337.38 an ounce, spurring gains in shares of gold miners. Newcrest Mining, Australia’s biggest producer, surged 9.8% in Sydney.

Crude oil dropped as much as 4.3% to $43.07 a barrel in New York, sliding as investors shunned riskier assets. 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. Aluminium and lead were the worst performers, with declines of 0.8%.

Wheat, corn and soybean futures on the Chicago Board of Trade slumped more than 1%. The US 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.

READ: Rand takes pummeling as Trump takes Ohio


Are you following the US election? Where in SA will you be watching? Who do you want to win? Send us your thoughts!

For all the latest updates on the US 2016 Election, head over to our special report page. 

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