Dow futures, Asian shares tumble as Trump leads vote count

Emerging-market stocks and currencies slumped amid a global selloff after Donald Trump won the USA presidency in a stunning upset.

Throughout the election, various entities and figures warned a Trump victory might herald market crashes and economic recessions.

The yen traded up about 1.7 percent at 103.57 yen per dollar in a volatile day that saw it soften to 105.480 earlier on, when last-minute opinion polls had put Clinton in the lead.

“Shock and awe would aptly describe movements of global markets right now”, said Matt Simpson, a senior markets analyst at ThinkMarkets.

An ounce of gold was up 1.9 per cent at $1,299 while the dollar was only 0.1 per cent lower at 0.9764 Swiss franc.

‘A lot of Trump’s negative geopolitical rhetoric was concentrated around Mexico and trade with Mexico and tearing up the NAFTA agreement, so the peso just become this natural barometer of the election, ‘ said Deutsche Bank EM FX Strategist Gautam Kalani. “But he will definitely implement some of those ideas, which means that the current dollar strength won’t be sustained”.

Sovereign bonds whipsawed, with yields on 10-year U.S. Treasury notes initially flying down as much as 12 basis points to 1.75 percent – again the largest drop since the Brexit vote – only to climb back up to 1.96 percent in Europe. Hong Kong’s Hang Seng index fell as much as 3.7%, Singapore’s FTSE Straits Times Index by 2%, and Korea’s Kospi index more than 3%.

Sakakibara doesn’t expect increased fiscal stimulus to raise the USA debt level to beyond about 120-130 percent of gross domestic product, from around 105 percent now, limiting any potential dollar strength.

The Mexican peso also held up after recovering from Wednesday’s record low. Earlier, investors had appeared persuaded that Democratic candidate Hillary Clinton, seen as a more stable choice, would prevail. It’s mostly algo dealing in the market now, with dealers staying out.

It has also had impacts like allowing Mexican farmers more unrestricted access to USA markets for their agricultural goods, like corn.

The country’s currency crashed 8% to an all-time low Wednesday morning, as the USA election race tightened and the prospect of a Donald Trump presidency rose. “A Trump victory, the markets are not fully ready for that”.

“Even if in the case there is a Clinton comeback and she wins, the market already has reacted to the point where the dollar would have trouble climbing back”.

Christopher Mahon, Director of Asset Allocation Research at Barings, says Trump’s victory is an example of people believing that inequalities in society are a result of globalization.

However, high-yielding currencies in Asia-Pacific were battered against the dollar, with the South Korean won down 1.8 per cent, Australia’s dollar 0.9 per cent off, Indonesia’s rupiah down 1.1 percent and the Malaysian ringgit 0.5 per cent lower.

The dollar index.DXY, which tracks the greenback against six major world currencies, touched its highest level since November 1.

“Less chance of a Fed rate hike also helps keep investors smiling at the prospect of cheap money and accommodative global monetary policy stance for a while longer”, said Mike van Dulken, an analyst at Accendo Markets.

A Trump win would be the second major jolt to foreign-exchange markets in less than five months, after Britons voted in June to exit the European Union. The dollar was at 19.80 pesos, having spiked at 20.78 in Asia the previous day.

Benchmark U.S. crude rose 9 cents to close at $44.98 a barrel in NY. Meanwhile, Brent crude oil, the global benchmark, is down by 0.4% at $45.88 per dollar.

A hefty rally for oil prices provided a further layer of support to equity markets, as Brent crude rose 1.8 per cent at $46.85 a barrel.