Trump stumps markets, world
09 November 2016 Washington DC
Image: Shutterstock
Property magnate and reality TV star Donald Trump defied all expectations to become the 45th US president, immediately throwing global markets into turmoil.
The Asian markets were the first to react to the shock victory, with Japanese stocks on the Nikkei falling by 5 percent, their biggest single session fall since the UK’s Brexit vote in June.
Hong Kong’s Hang Seng Index dropped 2.8 percent before recovering slightly.
In the currency markets, the so-called ‘safe haven’ Japanese yen soared to 103.44 to the dollar as of 4am ET, while others, including the US dollar, fell.
The biggest loser as the news broke was the Mexican peso, which fell by 13 percent to historic a low against the dollar.
In the US, exchange-traded fund (ETF) short sellers that were part of the last-minute bear raid the day before voting began, which New York data analyst S3 Blacklight valued at $1.9 billion, could be set for a big pay off as the Dow futures plummeted by 750 points.
Nasdaq-100 futures were also down 220 points.
Shorting activity in the three major index ETFs, the Spider S&P ETF, iShares Russell 2000 ETF and the Powershares Nasdaq Trust ETF, accounted for combined short sales worth $4.5 billion.
Stefan Kreuzkamp, chief investment officer at Deutsche Asset Management, said that Trump’s victory “definitely caught markets by surprise”.
“We expect that market volatility should continue due to increased political uncertainty.”
Trump’s bid for the presidency hinged on key swing states where the vote was neither staunch Republican nor Democrat.
Victories in Florida, Ohio and North Carolina paved the way for Trump to take over as US president in 2017, although Democratic nominee Hillary Clinton is yet to officially concede the election.
“Trump’s unpredictability and his lack of political experience are more than enough reason to approach the coming months with some caution,” Kreuzkamp added, but “we do not think that investors should lose their nerve”.
“Let us not forget that the key constant in Trump’s election campaign was to continually surprise the public. It is entirely possible that after his election, he could in fact surprise markets on the positive side.”
Richard Stone, chief executive at private investment advisor the Share Centre, pinpointed the future of Federal Reserve chair Janet Yellen as one potential surprise that could affect markets.
“Over the coming days and months investors will also look to see the extent to which Donald Trump appears more moderate and conciliatory. For example, investors and markets would likely be concerned if Janet Yellen leaves the Federal Reserve early given some of Donald Trump’s rhetoric during the campaign,” he said.
Yellen was among several prominent financial figures targeted by Trump in his final campaign ad, in which he accuses Yellen and others of forming a “corrupt machine”.
“In short, in the near term markets globally will react to this shock result badly. It was not one the press or commentators outside of the US really saw coming and fears will abound as to the impact on global trade and global economic growth,” Stone added.
"The shock may be overplayed and the likely impact on the Federal Reserve’s December meeting at which it would probably now be unlikely to raise interest rates may over time help stocks recover the likely short-term losses.”
In his acceptance speech, Trump defied the initial market reaction and painted a much rosier picture of the country’s economic future.
“We will double our growth and have the strongest economy anywhere in the world,” he claimed.
The Asian markets were the first to react to the shock victory, with Japanese stocks on the Nikkei falling by 5 percent, their biggest single session fall since the UK’s Brexit vote in June.
Hong Kong’s Hang Seng Index dropped 2.8 percent before recovering slightly.
In the currency markets, the so-called ‘safe haven’ Japanese yen soared to 103.44 to the dollar as of 4am ET, while others, including the US dollar, fell.
The biggest loser as the news broke was the Mexican peso, which fell by 13 percent to historic a low against the dollar.
In the US, exchange-traded fund (ETF) short sellers that were part of the last-minute bear raid the day before voting began, which New York data analyst S3 Blacklight valued at $1.9 billion, could be set for a big pay off as the Dow futures plummeted by 750 points.
Nasdaq-100 futures were also down 220 points.
Shorting activity in the three major index ETFs, the Spider S&P ETF, iShares Russell 2000 ETF and the Powershares Nasdaq Trust ETF, accounted for combined short sales worth $4.5 billion.
Stefan Kreuzkamp, chief investment officer at Deutsche Asset Management, said that Trump’s victory “definitely caught markets by surprise”.
“We expect that market volatility should continue due to increased political uncertainty.”
Trump’s bid for the presidency hinged on key swing states where the vote was neither staunch Republican nor Democrat.
Victories in Florida, Ohio and North Carolina paved the way for Trump to take over as US president in 2017, although Democratic nominee Hillary Clinton is yet to officially concede the election.
“Trump’s unpredictability and his lack of political experience are more than enough reason to approach the coming months with some caution,” Kreuzkamp added, but “we do not think that investors should lose their nerve”.
“Let us not forget that the key constant in Trump’s election campaign was to continually surprise the public. It is entirely possible that after his election, he could in fact surprise markets on the positive side.”
Richard Stone, chief executive at private investment advisor the Share Centre, pinpointed the future of Federal Reserve chair Janet Yellen as one potential surprise that could affect markets.
“Over the coming days and months investors will also look to see the extent to which Donald Trump appears more moderate and conciliatory. For example, investors and markets would likely be concerned if Janet Yellen leaves the Federal Reserve early given some of Donald Trump’s rhetoric during the campaign,” he said.
Yellen was among several prominent financial figures targeted by Trump in his final campaign ad, in which he accuses Yellen and others of forming a “corrupt machine”.
“In short, in the near term markets globally will react to this shock result badly. It was not one the press or commentators outside of the US really saw coming and fears will abound as to the impact on global trade and global economic growth,” Stone added.
"The shock may be overplayed and the likely impact on the Federal Reserve’s December meeting at which it would probably now be unlikely to raise interest rates may over time help stocks recover the likely short-term losses.”
In his acceptance speech, Trump defied the initial market reaction and painted a much rosier picture of the country’s economic future.
“We will double our growth and have the strongest economy anywhere in the world,” he claimed.
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