Stocks re­bound af­ter ‘Trump slump’ in Asia

> Euro­pean mar­kets lead re­cov­ery, Wall Street trad­ing slightly lower af­ter a firmer open­ing

The Sun (Malaysia) - - SUNBIZ -

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.

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