A ‘Trump slump’ as world reacts in shock to upset win
NEW YORK: World stock markets sank after maverick Republican Donald Trump won the US presidential election, triggering chronic uncertainty that sent investors fleeing for safe-haven assets.
Asia kicked off the so-called “Trump slump” with Tokyo diving on concerns over the untested policies of the billionaire businessman and reality TV star.
In Asia, Tokyo stocks collapsed 5.4% and Hong Kong fell 2.2%.
Europe followed suit, tipping about 2% lower at the open in Frankfurt, London and Paris, but the British market rebounded briefly into slender gains after Trump’s conciliatory victory speech.
“This is a shock result. Twelve hours ago, people thought Clinton would win,” said City Index analyst Kathleen Brooks.
“Now the US has a commander-in-chief who has no political experience. This is the ultimate uncertainty.
“Markets are pricing in the worst possible case scenario. If he is not as bad as people think he is, then markets could recover soon.”
“After that initial plunge, European markets have seen a recovery,” added Spreadex analyst Connor Campbell.
“A surprisingly presidential Trump victory speech seems to have reassured investors,” he said.
The markets fell, too, when President Barack Obama was first elected in 2008.
The extraordinary US election outcome has drawn direct comparisons with Britain’s shock Brexit vote in June to leave the European Union.
Investors fled to safe-haven assets, with gold prices rising more than five per cent and German government bonds rallying.
Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, noted there were “significant” worries over Trump’s poli-cies.
“Clinton was a continuation of the status quo, whereas Trump is a huge leap into the unknown, so investors, as well as the wider public, have significant concerns about what he will do and whether he is up to the job,” O’Keeffe said.
“Trump is likely to cut taxes, invest in US infrastructure, be very pro-growth at home but be highly protectionist when it comes to the rest of the world.”
The incoming president insists he could bring jobs back to America by renegotiating international trade deals, while he has repeatedly vowed to ruthlessly pursue growth of the world’s biggest economy.
His victory comes at a key time for several free trade deals, including the sweeping Transatlantic Trade and Investment Partnership (TTIP) between the US and EU and the Trans-Pacific Partnership Agreement (TPPA), a free trade deal with 12 Asia-Pacific nations, including Malaysia.
The Moscow market rose on hopes of improving US relations as Russian President Vladimir Putin congratulated Trump.
The peso – which has been battered by Trump’s anti-Mexican promises that included the construction of a border wall – hit a record low against the dollar as the greenback soared to 20.7818 pesos.
Markets will be keenly waiting for indications of whether Trump intends to follow through on his pledges.
“On trade, we expect Trump to start by labelling China a currency manipulator and to bring a number of perceived disputes to the World Trade Organisation,” said Paul Ashworth, chief US economist at Capital Economics. — AFP