HONG KONG (3rd UPDATE) – Share markets collapsed Wednesday, November 9, and the dollar tumbled against the yen and the euro as Donald Trump looked on course to win the race for the White House, in a stunning upset with major implications for the world economy.
The Mexican peso also fell to a record low as safe haven assets rallied, with gold soaring more than 5%, while fears about the strengthening yen led Japanese authorities to hold crisis talks.
Initial confidence that market favorite former secretary of state Hillary Clinton would win was wiped out as results showed the firebrand tycoon picked up major scalps needed to take the White House.
Markets have been plunged into turmoil as Clinton is considered by many investors to be a safer bet than Trump, who is seen as a loose cannon with policies many fear could wreck the world’s number-one economy.
“It’s been a bloodbath in the markets over the last few hours with the Mexican peso suffering particularly badly as Donald Trump edges ever closer to the White House,” said Craig Erlam, senior market analyst at OANDA.
Tokyo collapsed 5.4% by the end of trade, while in the afternoon Hong fell 3% and Shanghai sank 0.5%.
Sydney gave up almost 2%, Seoul shed 2.7%, and Singapore dived 1.8%. Wellington plunged 3.3% while Taipei was 2.0% off. Manila skidded 3.3% and Jakarta 2%.
The Sensex on the Bombay Stock Exchange was 3.4% off having initially plummeted more than 6% as Trump’s impressive performance was mixed with news that high denomination notes were being pulled from circulation as part of a crackdown on tax evasion.
Futures on the S&P 500 and Nasdaq on Wall Street were more than 5% down while those on the Dow were off 4%. Futures on London’s FTSE 100 were also down more than 4%.
Memories of Brexit
“It’s quite scary,” Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors, said.
“The slightest move towards Trump moved the market very quickly.”
The Mexican peso – which was battered by Trump’s anti-immigrant rhetoric earlier in the campaign – hit a record low against the dollar.
The greenback soared to 20.7128 pesos, around its highest ever point and about 12% up on earlier levels.
The peso has been hammered as Trump’s anti-Mexican promises have included a pledge to remove undocumented immigrants, building a border wall, and tearing up a trade deal.
However the dollar tumbled against the yen as investors rushed into the Japanese unit, which is considered a safe bet in times of uncertainty and turmoil. The greenback was hovering just above 101 yen, having sat above 105 Tuesday.
The euro also rose 2.1% against the dollar, while gold soared 5.4% to $1,337.00 an ounce.
“For the second time this year it looks as though markets have got a little ahead of themselves when it comes to predicting the outcome of a major vote,” OANDA’s Erlam added.
“Back in June the markets had all but priced in a UK vote to remain in the EU, this time it was a similarly favorable market outcome that traders were banking on – a Clinton victory – and it seems that once again, they may have got it wildly wrong.”
High-yielding currencies in Asia-Pacific were battered against the dollar, with the South Korean won down 1.6%, Australia’s dollar 1.1% off, Indonesia’s rupiah down 1.1%, and the Malaysian ringgit 0.5% lower.
Oil prices plunged, with WTI sinking 3.5% and Brent 3% down.
Key figures around 0600 GMT
Tokyo – Nikkei 225: DOWN 5.4% at 16,251.54 (close)
Hong Kong – Hang Seng: DOWN 3.0% at 22,213.22
Shanghai – Composite: DOWN 0.5% at 3,132.84
Dollar/Mexican peso: UP at 20.7128 from 18.6152 pesos late Tuesday
Pound/dollar: UP at $1.2581 from $1.2378 Tuesday
Euro/pound: UP at 89.30 pence from 89.03 pence
Euro/dollar: UP at $1.1245 from $1.1020
Dollar/yen: DOWN at 101.50 yen from 105.14 yen
Oil – West Texas Intermediate: DOWN $1.56 at $43.42 per barrel
Oil – Brent North Sea: DOWN $1.41 at $44.63 per barrel
New York – Dow: UP 0.4% at 18,332.43 (close)
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