Markets keep their nerve as Trump sell-off is avoided

An employee puts on his coat while leaving work at a foreign exchange trading company in Tokyo as US President-elect Donald Trump delivers his victory speech. Picture: Behrouz Mehri/AFP/Getty Images
An employee puts on his coat while leaving work at a foreign exchange trading company in Tokyo as US President-elect Donald Trump delivers his victory speech. Picture: Behrouz Mehri/AFP/Getty Images
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Global markets continued to rebound after Wednesday’s shock US presidential win for Donald Trump as investors shook off pre-election fears.

The FTSE 100 Index rallied about 1 per cent or almost 66 points to 6,977 in early trading today following a surprisingly strong finish on Wall Street overnight and a bounce-back across Asia.

The much-feared election of Trump didn’t cause the one-way negative reaction many expected

Jasper Lawler

America’s Dow Jones Industrial Average closed 1.4 per cent higher after a cautious start to trading, with Asian markets following suit as the Nikkei 225 recovered losses seen on Wednesday to rocket nearly 7 per cent higher, and Hong Kong’s Hang Seng rose 1.9 per cent.

READ MORE: Nicola Sturgeon on US election: ‘not the outcome I hoped for’

Connor Campbell, financial analyst at Spreadex, said investors have had an “abrupt change of heart”.

“It’s a pretty incredible reaction from the markets, especially given the fact that between the shock reveal of Trump’s win and this morning there hasn’t been any increased clarity as to what the soon-to-be president’s policies actually will be,” he added.

The initial signs were ominous yesterday, with a brutal sell-off of shares in the Far East, as a jittery Tokyo market plunged 5 per cent and Hong Kong fell more than 2 per cent.

And in London the FTSE 100 blue-chip index at first spiralled down nearly 150 points on the outsider Republican’s victory.

But when Wall Street opened, the Dow Jones index, the broader-based S&P 500 and the technology stock-dominated Nasdaq index all lacked direction in early trading, only moving between modest gains and losses. That seemed to steady nerves in London, with the Footsie eventually closing the session up 1 per cent, or 68 points, at 6,911.

The picture was mirrored elsewhere in Europe. The French and German stock markets were down 1.3 per cent and 1.2 per cent respectively early on, but the Franfurt Dax index closed up 1.6 per cent, while the Cac 40 in France ended 1.3 per cent higher.

Jasper Lawler, a market analyst with CMC Markets, said: “The much-feared election of Trump didn’t cause the one-way negative reaction many expected.

“There will be [different] investors today, those cursing their knee-jerk reaction to sell and the calmer heads who bought the dip.”

Market experts said the conciliatory tone in Trump’s victory speech had helped soothe investor worries over the economic impact of his policies.

But the US dollar remained under pressure, weakening on fears that Trump’s victory could delay the US Federal Reserve from hiking interest rates.

This helped the pound rise 0.4 per cent to $1.245 and the euro to edge higher to $1.093.

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