WASHINGTON (Sputnik) – The markets in the United States and around the world were rumbled Wednesday by news of Republican nominee Donald Trump’s lead over his rival Hillary Clinton in US presidential elections and his consequent victory.
Trump led a surprising surge in Tuesday’s election, surpassing Clinton in Electoral College votes and finally reaching the 270 needed to win the election. Clinton has reportedly called Trump to concede victory while newly-elected Vice President Mike Pence hailed Trump as the new president.
Ahead of the elections, Bridgewater Associates, one of the world’s biggest investment management firms, told its clients that US stock markets are likely to suffer the biggest one-day drop in history in case of Trump’s election victory, with the Dow Jones falling some 2,000 points and wiping out almost $2 trillion off stock market portfolios. Asian markets were also expected to tumble, according to the firm.
US stock index futures were down around 5 percent in early Wednesday trading, with Dow Jones 30 Futures falling some 800 points.
Futures for the SP 500 stock index reached a multi-month minimum of 2028.50 points. The Nasdaq futures index and the DJIA index both fell around 5 percent as well.
Trading was halted early on Wednesday as circuit breaker mechanisms kicked in, preventing further falls and limiting selloffs.
Governments bond yields also reacted, with yields on 10-year US Treasury notes briefly dipping down 13 basis points to 1.73 percent before recovering to the previous level of over 1.86 percent.
The yield on 30-year US Treasuries decreased from over 2.6 percent to 2.54 percent before rising to 2.7 percent later in the day when the election outcome became more certain.
Jolts were also felt throughout the world, especially in Asia, where the Tokyo Stock Exchange Nikkei index went down over 5 percent.
China’s Shanghai Composite Index started trading over 1 percent below Tuesday’s closure before somewhat recovering to around -0.6 percent. The Shenzhen Composite Index is also down over 0.6 percent. The Hang Seng fell over 2 percent.
European stock exchanges were largely calm, while Russian stock markets opened up to 1.38 percent in the red on Wednesday morning.
Investors’ worries over the impending Trump presidency remains unclear, as Trump had vowed to cut taxes, a prospect traditionally good for the markets. Uncertainty over Trump’s concrete policies and the billionaire’s unpredictable nature have been cited as the key reasons.
The slump may well prove to be temporary as with Brexit, when stock markets recovered relatively quickly following surprise news of the UK referendum outcome.
The Mexican peso was the first to take a hit, losing 13 percent against the US dollar after staging the biggest rally in years. The currency is trading at 20.7 peso per dollar with experts forecasting a fall as low as 21.5 peso per dollar in case of Trump’s victory.
During his election campaign, Trump vowed to stem illegal immigration from Mexico by building a wall on the US border with the country as well as making Mexico pay for it.
The Australian dollar also plunged after reaching a six-month high, tumbling almost 2 percent to 76.89 US cents per Australian dollar by the time Trump claimed victory.
The US dollar itself was in the red against other currencies, falling over 0.8 percent against the euro, almost 2 percent against the yen and over 0.15 percent against the yuan.