Markets nervous over nail-biter US election

  • 09/11/2016
Markets nervous over nail-biter US election

8:07pm

Oil prices have tumbled on Wednesday as vote counting showed Republican Donald Trump edging ahead in an unexpectedly tight US presidential election, setting world markets on edge.

Crude futures markets roared into action as Mr Trump surprised by defeating Democrat Hillary Clinton in a series of key contests and opening a path to the White House.

US West Texas Intermediate (WTI) crude futures fell to a session low of US$43.07 per barrel, down more than four percent from their last close and their lowest since September, before inching back to US$43.26 a barrel at 4:55pm.

International Brent crude futures were down 3.3 percent at US$44.51 a barrel.

"This is déjà vu of the Brexit moment, very worrying," said Bob Takai, president at Sumitomo Corp Global Research in Tokyo, referring to Britain's surprise vote to leave the European Union in a referendum last June, which led to market turmoil.

The falls in oil came as prices for gold, a traditional safe haven for investors in times of high economic risk jumped, while the dollar fell sharply against a basket of other leading currencies.

"Investors moved into complete 'risk off' mode... Trump winning would have negative consequences on the price of oil," said Jameel Ahmad, vice president of market research at trading platform and research firm FXTM.

"The threat of growth forecasts being downgraded at least over the short-term due to investor uncertainty in theory weakens demand for commodities like oil."

Trump won the key battleground state of Ohio, Florida, North Carolina, and likely Georgia, and led Clinton in a series of other states that were too close to call.

Elsewhere, a report by the American Petroleum Institute (API) showed crude inventory figures rising by 4.4 million barrel was also weighing on markets.

7:08pm

The US stock market dropped to its limit on Wednesday morning, and Donald Trump hadn't even officially won the presidency yet.

The Dow is down more than 800 points, with stock market futures halted after cratering 5 percent. The Dow Jones industrial average was down 827 points, with the S&P 500 down 107 points. Technology-driven Nasdaq 100 markets have fallen 241 points.

5:45pm

The yen strengthened and gold rose, while stock markets fell as US presidential election results showed a probable win by Donald Trump, sending investors to so-called safe haven assets.

The Mexican peso had its biggest one-day drop since 1994's Tequila crisis, falling around 8 percent against the US dollar, on the prospects of a US president who has threatened to build a security wall to keep Mexicans out.

Safe-haven global currencies such as the Japanese yen strengthened against the US dollar.

The yen strengthened to a month-high of 102.01 against the dollar while spot gold climbed 2.3 percent. New Zealand two-year swaps were down 5 basis points to 2.15 percent while 10-year swaps are unchanged at 2.92.

Global markets became increasingly unsettled last month at the prospect of Mr Trump succeeding in his bid for the White House, following a letter from FBI director James Comey on October 29 announcing the FBI was reviewing emails belonging to Ms Clinton found in the unrelated investigation into Anthony Weiner.

The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street's fear gauge, rose to a five-month high at its last trade on November 4.

On Monday, the FBI confirmed no criminal charges are warranted against Clinton, pushing markets higher and causing the VIX to drop 16.9 percent, its biggest fall since June.

5:34pm

The fall on Kiwi markets from a likely Donald Trump victory in the US election is now bigger than Brexit's.

As of 5:30pm, the NZX50 was down 3.34 percent.

5:18pm

The uncertainty of the US election sent Dow futures and Asian markets tumbling, reflecting investor concern over what a Trump presidency might mean for the economy and trade.

Dow futures have dropped 700 points, or about 4 percent. Japan's Nikkei dropped nearly 5 percent and the Hang Seng in Hong Kong plummeted around 3 percent.

Mr Trump's unpredictable and anti-trade nature is largely to blame for the turmoil.

4:12pm

The New Zealand stock market is being sold off as Mr Trump did better than expected in the US Election.

Just after 4pm, the NZX50 was down 1.5 percent, having started the day in positive territory.

The Australian market is also in the red, down 2.1 percent.

ASB economist Kim Mundy says markets do not like uncertainty and there is a lot of uncertainty surrounding Mr Trump's policies.

A key barometer of the election has been the value of the Mexican peso against the US dollar. It started the day stronger but has weakened a lot as the race has tightened in key states.

US stock futures have also tumbled, and the US dollar has dropped against the Japanese yen.

Because of rising market uncertainty, the pricing of stocks is also fluctuating. The VIX, commonly called the "fear index" shows high volatility in the US market, indicating traders did not expect Mr Trump to win or do not have a favourable view of a Trump leadership.

Newshub. / NZN / Reuters

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