US Election 2016: Asia markets bounce back after Trump win

Britain’s FTSE was up 0.95 percent, Germany’s DAX rose 1.12 percent and France’s CAC was up 1.06 percent by 0415 ET.

The dollar firmed after sliding Wednesday on worries that uncertainty over Trump’s policies would cause the Federal Reserve to hold off an interest rate rise.

The Australian dollar, hammered on Wednesday by concern over Trump’s protectionist promises and their fallout for China and others, was back up over 1 percent against the greenback.

The MSCI Asia Pacific Index climbed 3.1 percent to 137.63 as of 4:01 p.m.in Hong Kong, heading for the biggest increase since February 15.

After tumbling by 1.9 per cent before Wall Street opened, the eurozone’s blue-chip Euro Stoxx 50 index bounded back into the black, to close up 1.09 per cent at 3,031 points.

The dollar also recovered in currency trading. The Canadian dollar fell 0.5 percent against the greenback, its lowest since late February.

Generally, however, investors saw signs that Trump will ditch the budget austerity policies that Western governments have pursued since the 2008 global financial crisis after he takes over in January.

The solid gains marked a reversal from earlier in the morning, when global stock markets were roiled after it became clear that Trump had sealed the win over Democrat Hillary Clinton.

Expectations that his policy stance – from protectionism and fiscal expansion – will boost inflation have been driving the surge in USA yields. At one point the Dow was down 500 points. Meanwhile, the S&P 500 index closed at 2,163, up about 24 points; while the Nasdaq climbed about 58 points to close at 5,251.

The Chinese yuan hit six-year lows as the central bank set its daily guidance rate weaker for a fifth straight session.

Asian emerging markets sold off sharply Friday as U.S.Treasury yields rose overnight. “If the deal is not right for the USA, then there’s no deal”. The euro dipped to $1.0908, compared to $1.1025 before the USA elections.

Investors after the election quickly shifted to focus on Trump’s priorities, including tax cuts, an increase in defence and infrastructure spending, and bank deregulation. The euro was down 0.3 percent at $1.0895, while the dollar rose 1.1 percent to 106.84 yen.

Ratings agency S&P Global on Tuesday affirmed the AA+ credit rating of the United States, but noted uncertainty over the future path of government debt would prevent any upgrade.

Japan’s Topix index advanced 5.8 percent, erasing the measure’s 4.6 percent slump on Wednesday, as the yen traded traded near a three-month low.

“Trump’s motto centres on the U.S. and Asia will see more trade pressure”.

“Asia ex-Japan is the region on the front line should a President Trump follow through on his main campaign pledges”, said Nomura’s analysts in a note.

The money market futures FFZ6 FFF7 are pricing in about 75 percent chance of a rate hike. That helped drive bond yields higher, as well as bank stocks. Goldman Sachs rose $4.13, or 2.1 per cent, to $196.73.

Expectations of rising USA price pressures if Trump delivers on promises to boost public spending and put barriers on cheap imports have driven Treasury yields higher and boosted the dollar since his victory, with emerging market currencies having borne the brunt of the selling.

US crude futures CLc1 fell 0.5 percent to $44.42 per barrel.