If markets truly hate uncertainty, the reaction by global investors to Donald J. Trump’s historic election victory should come as no surprise.
In defiance of polls that were — in hindsight — badly flawed, Republican Trump steamrolled Democratic challenger Hillary Clinton in the electoral contest.
As Trump’s numbers mounted Tuesday night, well in advance of his early morning victory speech hours later, markets around the world began to panic.
The stock sell-off began in Asia and worked its way to Europe, eventually hitting New York futures markets.
In the words of the New York Times, investors “yanked their money from the marketplace in an unrestrained bout of selling reminiscent of the outbreak of war or a major terrorist attack.”
The losses were reversed slightly as Trump gave his victory speech, which hit notes of conciliation and unity.
As the Washington Post described it, all of Wall Street’s three major stock indices were down 4 percent or more late Tuesday in pre-market trading, with futures for the Dow Jones Industrial Average down more than 700 points at a point before rebounding somewhat.
According to Forbes, the tumultuous night also saw an uptick in assets that typically rise in value during times of upheaval, with gold, the U.S. dollar, government bonds and U.S. Treasury notes all rising.
At the same time, Forbes and other outlets noted, the euro and the Japanese yen fell, while the Mexican peso plunged amid fears about what Trump’s policies toward Mexico will do to that nation’s economy.
Trump has proposed building a wall between the U.S. and Mexico to keep illegal immigrants from entering this country, and has said he will get Mexico to pay for the project.
Forbes noted that the peso rose to two-week highs on Tuesday when it appeared that early voting might benefit Clinton. It then tumbled by more than 13 percent after midnight as Trump victories were declared in state after state.
The BBC this morning is reporting that European markets had recovered some of their volume, but that Wall Street is bracing for the possibility of substantial losses.
In related news:
• WSJ reports that many power players on Wall Street were stunned by Trump’s victory.
• Russian President Vladimir Putin has congratulated Trump, as Russian leaders celebrate, Britain’s Independent newspaper reported.
• European media have been stunned by “Brexit 2.0,” BBC reported, in reference to this spring’s decision by British voters to pull out of the European Union.
Get in on the discussion
As Trump prepares for the White House, issues affecting various industries are weighing on business leaders’ minds. What’s to become of health care? How will the president-elect address trade relations?
Those questions are among the topics CPBJ staff will talk about in a free webinar titled, “We have a winner…Now what does it mean?” Set for 10 a.m. Wednesday, the discussion will provide an early forecast on business issues that the new leader of the country will likely impact.
Click here to sign up.