Global markets in turmoil amid Trump’s showing in race
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.