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How markets reacted to Trump’s election triumph
U.S. Election 2016
A trader from ETX Capital working in central London on Nov. 9, 2016, following the result of the U.S. presidential election.

A trader from ETX Capital working in central London on Nov. 9, 2016, following the result of the U.S. presidential election.

Daniel Leal-Olivas/AFP/Getty Images

Matt LundyEconomics Editor

This article was published more than 9 years ago. Some information may no longer be current.

Global markets were rocked Wednesday but eventually rallied after Donald Trump sailed to a surprise victory in the U.S. presidential election.

Once considered a long shot in the race, the Republican candidate surged past his Democratic rival, Hillary Clinton, to capture key battleground states and secure the 270 electoral votes needed for the win.

Stocks had climbed higher earlier this week in anticipation of a victory for Ms. Clinton. But as Mr. Trump's prospects grew brighter on Tuesday night, turbulence took hold as traders reacted to the shock development.

The volatility was short-lived. North American shares marched higher during Wednesday's session, with the Dow Jones Industrial Average finishing near an all-time high.

Here's a breakdown of the day:

Stocks

North American equities opened largely unchanged, but later moved firmly into positive territory. The S&P/TSX closed up 0.7 per cent, the S&P 500 up 1.11 per cent and the Dow Jones up 1.4 per cent on the day.

It was quite a reversal, given that U.S. equity futures fell sharply in overnight trading.

European equities swung to a positive finish, with London's FTSE 100 closing up 1 per cent and Germany's DAX up 1.56 per cent.

Asian shares had a rougher go. Here's how Japan's Nikkei 225 fared on the day:

Currencies

Currency markets experienced some particularly big swings over the past day.

The Canadian dollar tumbled below the 75-cent (U.S.) mark.

But that pales next to the Mexican peso, which had tracked Mr. Trump's fortunes closely during the campaign. Mexico's currency plunged by more than 13 per cent at one point, but later clawed back some ground.

Oil

Like other assets, U.S. crude suffered an initial slump, only to recoup losses.

Gold

Conventional wisdom would expect gold to shoot higher given the surprise nature of Mr. Trump's win. It did – then fell back to earth.

Analyst reaction

Bank of America Merrill Lynch:

With Trump winning the election, expect heightened volatility and downside risk in the near-term as polls and prediction markets until last night had been pointing to a Clinton victory. We expect lack of clarity around Trump's policies - from feasibility to prioritization - will likely weigh on sentiment and pressure already muted business investment, as investors and corporates weigh the balance between the potential for higher growth and rates against the risks of trade friction, geopolitical conflict and discontinuous Fed policy.

Michael Hewson of CMC Markets:

If Brexit was a shock to markets, then today is likely to be perceived as Brexit on stilts despite the fact that today's reaction appears much more orderly, despite sharp falls in the aftermath of the realisation that Hillary Clinton had fallen short of her campaign to win the White House.
That the reaction seen thus far appears to have been much more tempered is probably due to the emollient and conciliatory nature of Mr Trump's acceptance speech, and the fact that there was always that nagging doubt that the pollsters may well be wrong. This has once again proved to be the case begging the question what is the point of opinion pollsters.

Paul Ashworth of Capital Economics:

Donald Trump's conciliatory acceptance speech, which suggests that he can be a more statesmanlike President rather than the demagogue of the election campaign, has helped to reverse some of the initial sell-off in equities in the immediate aftermath of his shock triumph. The bottom line, however, is that he has repeatedly proven to be a volatile character with a very thin skin. In addition, neither Trump nor many of his inner circle have any experience in government. Those factors suggest to us that uncertainty and market volatility will remain elevated for months, if not years.

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