Asia shares, Dow futures sink as Trump leads in vote count

The dollar, the Mexican peso and crude oil all plunged as Mr Trump gained ground, with USA stock futures tumbling almost five per cent, likely wiping trillions of dollars of value off global financial markets, while traditional safe havens such as sovereign bonds, the Japanese yen and gold all rallied. He also has vowed to build a wall along the United States’ southern border and force Mexico to pay for it.

But the lack of clear policy details has left many worldwide uneasy over the future direction of the US economy.

“I don’t think a Trump scenario was taken seriously in the last days by the market”, said Ernesto Revilla, an economist at Banamex and the government’s former chief economist.

Wall Street has favored a Clinton win because of some of Trump’s policies, such as his positions on trade.

If Trump wins, dollar bulls may still come out on top if they can stomach short-term losses.

Markets had been jittery in recent weeks over the prospect of a Trump administration.

“Investors are now thinking that things aren’t going to be as bad as what they had thought”.

The plunge could even eclipse the Brexit shocker that rocked financial markets in June. Eastern time. The Standard & Poor’s 500 index gained 10 points, or 0.5 per cent, to 2,141.

Investors again revised the outlook for US interest rates, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 80 percent. Some analysts are ruling it out entirely.

But the U.S.is Mexico’s largest trade partner.

But one of Trump’s most prominent supporters, billionaire Carl Icahn, predicted that the sell-off would be short-lived.

Trump’s threats to deport more than 11 million undocumented migrants living in the United States, roughly half of whom are Mexican, could also put Mexican authorities under strain, said Cuauhtemoc Galindo, the mayor of Nogales, Mexico.

While all analysts predict the dollar would suffer in the immediate aftermath of a Trump win, Julius Baer and second-placed Rand Merchant Bank said the USA currency would rally in the long run because the Republican’s policies, including pledges to cut taxes and spend as much as US$500 billion on infrastructure programmes, are inflationary. Trump’s victory has raised concerns that the USA and China might embark on a trade war of sorts and that protectionism around the world will grow.

“Forecasts are always hard – you’re basically trapped between fundamentals and momentum”, Kohl said. However, commerce between the two has grown much faster than their respective economies since NAFTA, World Bank and US data show.

Japan’s Deputy Finance Minister Masatsugu Asakawa said speculative movements were at work in the currency markets. The firm says such a steep plunge would force Mexico’s central bank to call an emergency meeting the same day. Hong Kong’s Hang Seng closed 2.2 percent lower to 22,415.19 while the main index in Shanghai fell 0.6 percent to 3,128.77. The Nasdaq composite index rose 51 points, or 1 percent, to 5,245.

“The market has calmed down a bit and given the benefit of doubt to a more conciliatory Trump”, said Marco Oviedo, an economist at Barclays in Mexico City.

The Mexican peso is getting clobbered as results of the US election are coming in.

The peso has dipped every time Trump gains ground over Democrat Hillary Clinton, and it has recovered every time Clinton moves ahead of Trump.

The Australian dollar, hammered on Wednesday by concern over Trump’s protectionist promises and their fallout for China and others, was back up by more than 1 percent against the greenback AUD=D4 . The announcement sent the dollar surging against the yen JPY=, euro EUR= and pound, and gave a jolt to the Mexican peso MXN=. Germany’s main DAX index had fallen by around 1.6 percent before moving modestly into the green, and London’s FTSE-100 was rose 1 percent. Other energy futures were also mixed. Benchmark U.S. crude futures lost 53 cents to $44.44 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price global oils, slid 11 cents to close at $46.04 a barrel in London.

In metals trading, the price of gold slid $4.90 to $1,274.50 an ounce, while silver gained 21 cents, or 1.1 percent, to $18.36 an ounce.