Global mar­kets in tur­moil amid Trump’s show­ing in race

Baltimore Sun - - BUSINESS - By James Re­gan and Adam Haigh

Global mar­kets were thrown into dis­ar­ray as early re­sults from the U.S. elec­tion in­di­cated that Don­ald Trump might pre­vail over Hil­lary Clin­ton in the race for the pres­i­dency, shock­ing traders who had fo­cused on polls in re­cent days show­ing the op­po­site.

Pan­icked in­vestors rushed to un­wind bets they’d piled on amid pre­dic­tions Clin­ton would sweep to vic­tory. Fu­tures on the S&P 500 in­dex plunged more than 4 per­cent and Mexico’s peso, which tends to weaken as Trump’s prospects im­prove, sank by the most in two decades.

U.S. Trea­suries, the yen and gold all soared by the most since Bri­tain’s sur­prise vote to leave the Euro­pean Union sent shock waves through mar­kets in late June.

A Trump vic­tory, but­tressed by elec­toral gains from Florida to Ohio, had been por­trayed by an­a­lysts as hav­ing the po­ten­tial to un­hinge mar­kets that were bank­ing on a con­tin­u­a­tion of poli­cies that co­in­cided with the sec­ond-longest bull mar­ket in S&P 500 his­tory.

Brexit was the last ma­jor po­lit­i­cal shock and led to the S&P 500 slid­ing 5.3 per­cent in two days.

“With more votes be­ing counted and it look­ing more and more like Trump will ac­tu­ally get in, the mar­ket’s hav­ing a mas­sive dive,” said Karl Goody, a pri­vate wealth man­ager at Shaw and Part­ners Ltd. in Aus­tralia, which over­sees about $7.6 bil­lion. “This has caught a lot of peo­ple off guard. We’re all very sur­prised.”

Most polls showed Clin­ton ahead of Trump go­ing into the vote and web­sites that took bets on the vic­tor had put the Demo­crat’s odds of win­ning at 80 per­cent or more. Trump pledged to clamp down on im­mi­gra­tion and rene­go­ti­ate free-trade agree­ments with coun­tries in­clud­ing Mexico.

“We’re see­ing the mar­ket scram­ble, we’re see­ing fear of trade war seep­ing into Trea­sury prices,” said Robert Tipp, chief in­vest­ment strate­gist in Ne­wark, N.J., for the fixed-in­come di­vi­sion of Pru­den­tial Fi­nan­cial Inc.

U.S. Trea­suries led gains in global sov­er­eign bonds and fu­eled spec­u­la­tion the Fed­eral Re­serve will hold off on rais­ing in­ter­est rates.

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