Special Correspondent :
Stock markets around the world responded negatively on Wednesday with the victory of Donald Trump in the US presidential election.
Investors braced for a slump in global stock markets, the US dollar and most commodities by Trump’s victory.
Earlier, they feared that a Trump victory could trigger global economic and political turmoil, creating massive uncertainty for stocks around the world.
The US stock futures posted steeper and steeper declines as the day wore on.
The Dow Jones mini slumped five per cent and was halted after hitting their limit threshold – the last time this occurred was during the Brexit referendum. It resumed trading shortly after.
The S&P 500 mini was down 4.6 per cent, while the Nasdaq slumped 4.8 per cent, indicating major selling off when Wall Street opened later in the day. The FTSE 100 index slumped 130 points as London markets opened – a fall that was projected to be considerably bigger at more than 230 points until Trump took to the stage in New York to celebrate his victory.
After the first half hour of trading in London, the FTSE 100 index was showing a loss of about 50 points or 0.7 per cent and on Wall St the Dow Jones was being called about 400 points lower. Japan’s stock market index had tumbled 919 points and the dollar fell 3 per cent against the yen as investors digested the implications of Trump’s presidency, which stunned investors who had been banking on Hillary Clinton winning the race for the White House.
Jeremy Cook, chief economist at money brokers World First, said the prospect of a Trump presidency was more far reaching than the UK’s vote to leave the EU.
“Brexit was about UK instability. Trump is about global instability,” said Cook. On the foreign exchange markets, the Mexico peso suffered its biggest decline in more than two decades – one fears that Trump will embark on protectionist measures that would damage its relationship with America’s third largest trading partner.
It tumbled as much as 13 per cent, a huge move for a currency, crashing through 20 pesos per dollar.
Mexico has reacted with horror at the prospect of a Trump victory: during the campaign the property tycoon pledged to renegotiate the North American Free Trade Agreement with Mexico and Canada – a move that many believe would wreak havoc in economies, such as Mexico’s, that are heavily dependent on exports. While the votes were counted, the dollar had been weaker against major currencies – the Japanese yen, euro and even the pound.
“The US dollar has weakened against a range of currencies, and we’re witnessing a flight to safety. The Japanese yen and Swiss franc have firmed across the board, and the euro is up against the pound – a sign that since Brexit, sterling is no longer viewed as a safe haven,” said Alex Edwards, currency analyst at UK Forex. Japan’s chief cabinet secretary, Yoshihide Suga, told reporters that officials were “closely watching” wild currency fluctuations and would intervene in forex markets if necessary. Masatsugu Asakawa, the country’s Vice Finance Minister for International affairs, signalled Tokyo’s readiness to act in an attempt to stem the yen’s rise, but had had “no comment” on currency intervention.
Meanwhile, the Australian share market has lost about $34 billion in value as Trump wins elections.
In a highly volatile day, the ASX 200 had an upbeat start, rising as much as 0.9 per cent to 5,314.
However, as vote counts started coming in, trade became more volatile, with swings deep into the red as Trump clawed slightly ahead. At some points during the afternoon Australia’s benchmark share index, the ASX 200, had slumped almost 4 per cent, but it pulled back the worst of those losses to finish 1.9 per cent lower to 5,157. The Australian market’s SPI 200 futures index was down 1.8 per cent. Across the Asia-Pacific region, shares also tumbled. In Japan, the Nikkei slumped 5.8 per cent, while the Hang Seng in Hong Kong sank 3.5 per cent.
