Stocks rebound after ‘Trump slump’ in Asia
> European markets lead recovery, Wall Street trading slightly lower after a firmer opening
LONDON: World stock markets yesterday reacted with a sharp initial downturn to maverick Republican Donald Trump’s shock presidential election win, but quickly recovered their poise with surprising resilience.
Trump, 70, will now become the 45th president of the United States at his inauguration on Jan 20.
Asia kicked off a “Trump slump” yesterday, with Tokyo diving on concerns over the untested policies of the billionaire businessman and reality TV star.
Tokyo had collapsed 5.4% by the end of trade, while Hong Kong fell 2.2% and Shanghai sank 0.6%.
Sydney gave up almost 2%, Seoul shed 2.3% and Singapore dived 1.8%. Taipei was 3.0% off. Manila skidded 2.5% and Jakarta 2%.
Europe followed suit, tipping about 2% lower at the open in Frankfurt, London and Paris. But all three markets rebounded into slender gains after Trump’s conciliatory victory speech.
At 1500 GMT, London’s FTSE 100 was up 0.8%, Frankfurt’s DAX 30 was 0.2% higher and Paris’ CAC 40 was also up 0.2%.
In New York, stocks dipped in choppy trading after opening slightly firmer. About 50 minutes into trading, the Dow Jones Industrial Average was down 0.1%, the broad-based S&P 500 lost 0.4% while the tech-rich Nasdaq Composite Index fell 0.6%.
The Mexican peso – which has been battered by Trump’s anti-Mexican promises that included the construction of a border wall – plunged by 7.64% to a record low against the US dollar.
The Mexican currency weakened to a level of 20.3 pesos to the dollar, according to trading data from private bank Citibanamex.
Meanwhile, Mexico’s stock market tumbled by 3.18% in the first few minutes of trading.
The dollar recovered from early losses, and even showed gains against the euro in the European afternoon.
On the oil market, West Texas Intermediate was 20 cents lower at US$44.78 per barrel at around 1500 GMT. Brent crude was down 13 cents at US$45.91
“Donald Trump’s victory in the US presidential election has, so far, had less impact on financial markets than most anticipated,” said Andrew Kenningham, senior global economist at Capital Economics.
“We suspect that it has also made little difference to the immediate outlook for the global economy,” he said, adding however that there were “bigger question marks” over longerterm prospects.
“After that initial plunge, European markets have seen a remarkable recovery this post-election Wednesday,” said 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.”
“As people have come to make considered assessments, the reaction seems more rational,” added David Jane at Miton’s.
Summarising the impact of Trump’s expected economic policies, Jane concluded that they will be “broadly inflationary”. This means, he said, that they will be “supportive of equity markets and negative for bonds”.
“What people promise on the campaign trail and what actually happens are two different things,” said JJ Kinahan, chief market strategist at TD Ameritrade. “So we’re still speculating until he actually takes office and the new Congress comes.”
“It’s now looking like a bad day, but no sense of panic.” – AFP
A Malaysian schoolgirl poses for a photograph with a cut-out of now US president-elect Donald Trump during an event organised to follow the election results in Kuala Lumpur yesterday.