World stock markets sank Wednesday after maverick Republican Donald Trump surprisingly won the US election, triggering chronic uncertainty that sent investors fleeing for safe-haven assets, dealers said.
Asia kicked off the so-called “Trump slump”, with Tokyo diving on concerns over the untested policies of the billionaire businessman and reality TV star, who has scored a surprise victory over Democrat market favourite Hillary Clinton.
Europe followed suit, tipping about two percent lower at the open in Frankfurt, London and Paris, but the British market rebounded briefly into slender gains after Trump’s conciliatory victory speech.
“This is a shock result. Twelve hours ago, people thought Clinton would win,” City Index analyst Kathleen Brooks told AFP.
“Now the US has a commander-in-chief who has no political experience. This is the ultimate uncertainty — triggering a Trump slump.
“Markets are pricing in the worst possible case scenario. If he is not as bad as people think he is, then markets could recover soon.”
Trump, 70, will now become the 45th president of the United States at his inauguration on January 20.
“After that initial plunge, European markets have seen a remarkable recovery this post-election Wednesday,” added Spreadex analyst Connor Campbell.
“A surprisingly presidential Trump victory speech seems to have reassured investors, the talk of infrastructure spending and a lack of usual vulgarity allowing for a relative aura of calm.”
– Brexit-style volatility –
The extraordinary US election outcome has drawn direct comparisons with Britain’s shock Brexit vote in June to leave the European Union.
“Of course, just as Britain has not yet Brexited, America has not officially entered the era of Trump, suggesting that much of the trading that greeted the open was a gut-reaction rather than informed positioning,” added Campbell.
“That does, however, leave plenty of room for volatility as 2016 begins to wrap up, let alone the months and years of an actual Trump presidency.”
Investors fled to safe-haven assets, with gold prices rising more than five percent and German government bonds rallying.
Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, noted there were “significant” worries over Trump’s policies.
“Clinton was a continuation of the status quo, whereas Trump is a huge leap into the unknown, so investors, as well as the wider public, have significant concerns about what he will do and whether he is up to the job,” O’Keeffe told AFP.
“Trump is likely to cut taxes, invest in US infrastructure, be very pro-growth at home but be highly protectionist when it comes to the rest of the world.”
The incoming president insists he could bring jobs back to America by renegotiating international trade deals, while he has repeatedly vowed to ruthlessly pursue growth of the world’s biggest economy.
– ‘Sea change’ in US politics –
“Equities opened to a sea change in the US political landscape,” noted AJ Bell Investment Director Russ Mould.
Initial confidence that Clinton would win vanished as results showed the firebrand tycoon picking up the major scalps needed to take the White House.
After he won a swathe of states, Clinton called Trump to concede.
In Asia, Tokyo stocks collapsed 5.4 percent and Hong fell 2.2 percent.
Moscow however rose on hopes of improving US relations as Russian President Vladimir Putin congratulated Trump.
The peso — which has been battered by Trump’s anti-Mexican promises that included the construction of a border wall — hit a record low against the dollar as the greenback soared to 20.7818 pesos.
– Key figures at 1300 GMT –
London – FTSE 100: DOWN 0.2 percent at 6,829.10
Frankfurt – DAX 30: DOWN 0.7 percent at 10,407
Paris – CAC 40: DOWN 0.9 percent at 4,438.90
EURO STOXX 50: DOWN 1.3 percent at 2,984.70
Tokyo – Nikkei 225: DOWN 5.4 percent at 16,251.54 (close)
Hong Kong – Hang Seng: DOWN 2.2 percent at 22,415.19 (close)
Shanghai – Composite: DOWN 0.6 percent at 3,128.37 (close)
Dollar/Mexican peso: UP at 19.7310 pesos from 18.3329 pesos
Pound/dollar: UP at $1.2408 from $1.2378 Tuesday
Euro/pound: UP at 88.98 pence from 89.03 pence
Euro/dollar: UP at $1.1040 from $1.1020
Dollar/yen: DOWN at 103.60 yen from 105.86 yen
Oil – West Texas Intermediate: DOWN 14 cents at $44.84 per barrel
Oil – Brent North Sea: DOWN 7 cents at $46.11
New York – Dow: UP 0.4 percent at 18,332.43 (close)