Donald Trump’s shock win triggers tumultuous day’s trading on global markets

The Dow Jones Industrial average surged toward a record close on Wednesday after shaking off the after-shock of Donald Trump’s surprise victory in the US presidential race Tuesday night.

As the world readied itself for the official announcement of Donald Trump as President-elect, futures on the Dow Jones fell around four percent as investors braced themselves for the news.

Wall Street is typically seen as preferring gridlock, or shared control of the White House and Congress, than a sweep of both chambers of Congress and the presidency.

USA stock futures dived 5 percent at one point, worse than the carnage caused by the British vote to leave the European Union in June that wiped trillions of dollars off world markets. A separate report from Oxford Economics estimated Trump’s plans would lead to a recession by the end of 2017 and cause the USA economy to contract by 2% in 2018.

USA banking shares (.SPSY), kept the S&P 500 on the plus side as they rallied for a fourth straight session.

Earlier, investors had appeared convinced that Hillary Clinton would win the presidency. The peso, which had been viewed as a proxy for Trump’s chances of winning, plunged more than 11 per cent, while the US dollar fell against the yen. “That’s a function of fear as much as fact”. Trump’s economic policies may prove unfriendly to emerging markets in Asia, but not developed economies like Japan, Ielpo said. They also tell us that financial markets view the consequences of this outcome quite negatively.

Trump has talked relentlessly about rebuilding America’s infrastructure.

Keith Parker, global equity strategist at Barclays who studied what might happen if Trump were to win, projected the S&P 500 could move initially to around 2,000, if the Republican businessman prevails. The S&P futures slid 5 percent and hit a limit down, meaning the contract could not trade lower, only sideways or up. Nomura Holdings Inc. surged 11 percent as analysts expect brokerages are likely to benefit from increased market volatility.

Traders are selling bonds to hedge against the possibility that interest rates, which have been ultra-low for years, could rise steadily again under a Trump administration, said Tom di Galoma, managing director of trading at Seaport Global Securities. Trump was locked in tight races across a handful of key battleground states with polls beginning to close across the nation. 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.

At 2:37 a.m. EST, multiple news outlets including The Associated Press have said Republican candidate Donald Trump will be the next President and global markets have tumbled.

Investors are keeping a close eye on the US presidential election Tuesday, a day after the market had its biggest gain since March. Economists Eric Zitzewitz and Justin Wolfers, the authors of the report, also estimated the price of oil would be slashed by $4 a dollar and the Mexican peso decline by 25%.

The US dollar also rose throughout the day and continued to make gains in Asia on Thursday.

One immediate impact of his victory could see the U.S. Federal Reserve opting against an interest rate hike at its next meeting in mid-December – especially if financial markets endure a period of pressure. “Right now it’s just emotional”.

“We will get through this but the adjustment process will take longer”, says Joy.