Donald Trump shock victory over Hillary Clinton in historic US presidential election has sparked unprecedented volatility in the markets, reports The Independent.
The Republican candidate shattered expectations on Tuesday achieving one of the most improbable political victories in modern US history with analysts saying it was “Brexit all over again”.
Joshua Raymond, analysts at XTB.com, said: “The outcome of this contest has seemingly caught the markets off guard in a repeat of the Brexit vote with forecasters and reputable pollsters wide of the mark once more in their predictions.”
The result sent Britain’s FTSE 100 on a rollecoster ride. The index plunged by 2 per cent or 140 point at the open, wiping about £37 billion off the value of the 100 biggest UK companies, before recovering from its losses and romping back during Donal Trump’s victory speech.The index was still down about 1 per cent at 8.30am.
Meanwhile, gold, seen a safe haven stock, enjoyed its biggest rally since the Brexit vote, rising by almost 5 per cent and lifting precious metals producers Fresnillo and Randgold Resources to the top of the blue chip index.
The picture was similar on European bourses, where market suffered from sharp losses before rebounding.
The German Dax plungied 3 per cent before trimming its losses to 1.7 per cent and the Paris market opened 2.9 per cent lower after Trump win, before rebounding to 1.54 per cent.
Expert said Donald Trump’s victory speech has helped to reassure investors and helped to contain the fall of the FTSE which was predicted to be 3 per cent down.
His pledge to serve all the American people, rebuild the nation’s infrastructure, double the growth rate and “do a great job” have all brought some calm to the markets after a very volatile night.
Asian markets sank overnight with Japan’s Nikkei 5 per cent lower and Hong Kong’s Hang Seng off by 2 per cent. Meanwhile the Mexican peso plummeted by 13 per cent hitting a record low.
Eric Lonergan of M&G Investments said: “The surge in anti-establishment sentiment is definitively global. Brexit can no longer be dismissed as a freak event. It is a trend. Donald Trump looks almost certain to win, by defying his party, the media, and conventional politics. Populism is coming to power. The critical issue now is what this mean in practice.”
Ranko Berich, Head of Market Analysis at Monex Europe, said investors should brace for volatility: “With Donald Trump winning the US election a broad global risk off move is developing, although we’ve not seen the kind of panic that followed the EU referendum, except in isolated instances such as the Mexico Peso.”
“All eyes will now be on what direction Trump takes his administration, though further volatility is all but assured.”