The U.S. stock market is expected to fall in heavy trading on Wednesday as investors became scared due to the election of Republican candidate Donald Trump as the country’s president.
Adam Shell and Matt Krantz of USA Today had the news:
The open of trading Wednesday if Trump completes the upset win will likely be a bloodbath, he adds, citing the market action late Tuesday night and early Wednesday morning.
“Investors have to be ready for significant volatility,” Self says, adding that the U.S. stock market could suffer a 5% downdraft when the market opens for regular trading Wednesday morning. A 10% correction is possible in coming days due to the political uncertainty a Trump win would bring, he says, adding that he doesn’t see the election causing a bear market, or a drop of 20% or more.
Here’s a tally of the carnage:
* U.S. stocks. In afterhours futures trading the Dow was off 630 points, after being down as much as 800 points. The futures market is used as a signal to help traders determine stocks’ value when regular trading resumes. If these losses persist into regular trading, declines could approach the largest one-day decline in the Dow since the average lost 777.68 points on Sept. 29, 2008, during the throes of the financial crisis. This decline also tops the 610-point drop back on June 24, when Britain shocked the world and investors when it voted to exit the European Union, a crisis known as Brexit.
* Gold. The yellow metal usually bought when investors worry about a major economic slowdown surged upwards of 5% to $1,337.38 an ounce, according to Bloomberg data. That is the highest level for gold since September, Bloomberg News says.
Simon Denyer and Ylan Q. Mui of the Washington Post noted Trump’s acceptance speech calmed some nerves:
A conciliatory acceptance speech by Trump also appeared to help calm nerves, with the Republican president-elect saying it was “time to bind the wounds of division.” A promise to rebuild the nation’s infrastructure was also seen as positive for stock markets.
The Mexican peso — which had fallen as the Republican nominee rose in the polls during his campaign — nosedived to an eight-year low, before recovering some of its losses to stand around 8.5 percent lower.
The panic had stretched all the way to Asia, where Japan’s Nikkei index plunged more than 900 points, or 5.4 percent, Wednesday. In a flight to safety, gold charged higher, and the yen also surged.
The assumption that Democratic nominee Hillary Clinton would notch a comfortable victory had boosted markets earlier in the week. But on Tuesday night, investors began to grapple with the possibility that Trump’s controversial proposals to rip up long-standing trade agreements, deport millions of immigrants and radically re-engineer the tax code could become reality.
“Pollsters need to go away and have a holiday — every single one of them should be fired,” said Chris Weston, chief markets strategist at IG Markets in Melbourne. “Markets weren’t prepared for this.”
Peter Goodman of the New York Times reported that investors will be wary of Trump for some time:
The stampede for the exits resonated as recognition that a vast range of policies framing global commerce — from trade to immigration to defense to climate change — were now subject to a potentially radical refashioning.
It is said frequently that what markets crave more than anything is certainty. The globe suddenly seems in dire shortage of that.
The stunning June vote in Britain to abandon the European Union effectively redrew the regional map governing trade, risking a rupture within a marketplace encompassing 500 million relatively affluent people. But a Trump presidency presented the possibility that the whole atlas for international commerce had been torn to bits.
During the campaign, he vowed to renegotiate the North American Free Trade Agreement between Mexico, Canada and the United States. He repeatedly promised to slap punitive tariffs on imports from China, raising the prospect of a trade war between the world’s two largest economies.
