Stock market nears record high after election

Stocks are opening slightly lower on Wall Street as markets have a tempered reaction to the victory of Donald Trump in the US presidential election.

Toyota Motor Corp. jumped 5.3 percent and Sony Corp.’s shares rose 5.2 percent in early trading. Stock markets in Asia and Europe also took solid dips as the US political landscape was rattled by the Trump victory.

At one point, the futures for the Dow was down over 4%, but when it came time for Trump to talk after being declared the victor the financial markets had already steadied. Around 8:03 a.m. ET, they held about 23 points lower and 76 points lower, respectively.

As well as taking comfort from Trump’s comments that he will look to unify a deeply divided nation, investors are focusing on his promises to boost US economic growth through infrastructure spending and by cutting red tape, rather than uncertainties such as what he might do with trade agreements. A Trump victory had been portrayed by analysts as having the potential to unhinge markets that were banking on a continuation of policies that coincided with the second-longest bull market in S&P 500 history.

Mr Trump’s trade policies remain a concern in the Far East after he previously voiced opposition to the Trans-Pacific Partnership and threatened to impose punitive tariffs of 45% on Chinese goods entering the US.

In currencies, the US dollar fell 1.9% against the Japanese yen.

“We have seen the market reaction be nowhere near as bad as it might have been – we could yet see a big pullback”, said ETX Capital analyst Neil Wilson. “That’s a function of fear as much as fact”. Dow futures plunged 4 percent at one point. S&P 500 futures are also recovering, paring earlier losses to a 1.6 percent decline.

By about 9:30 pm Eastern Standard Time (0230 GMT) the count showed Donald Trump with 137 electoral votes to Clinton’s 104.

Equity futures plunged as Trump claimed victories in several key battleground states (http://www.marketwatch.com/story/dow-futures-plunge-450-points-on-election-turmoil-2016-11-08), such as Florida and Ohio. While the victor has yet to be determined, Trump appeared to be on the verge of a stunning victory.

“Markets are in all out panic mode that President Trump could become a reality”, said Kathleen Brooks, a research director at the foreign exchange trading firm City Index in London.

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.

But despite the Asia market slide on Wednesday, the major United States markets all rallied robustly during the day and closed more than 1% higher.

However, a reassuring victory speech – followed by calls by Clinton and President Obama to get behind Trump – provided some encouragement to traders, sending risk assets rallying.

“A lot of Trump’s negative geopolitical rhetoric was concentrated around Mexico and trade with Mexico and tearing up the NAFTA agreement, so the peso just become this natural barometer of the election”, said Deutsche Bank EM FX Strategist Gautam Kalani. By late Wednesday Tokyo time, the dollar was at 103.36 yen, down 1.5 percent from 105.46 earlier in the day.

Pollsters and Clinton supporters weren’t the only ones taken aback by Trump’s win, however. “You’ve also had the stock market come back overnight”. However, Wall Street, who had earlier favoured Clinton over Trump because of some of his projected trade policies, chooses to wait and watch over Trump’s trading policies over emerging markets.