On 09 November, 2016 – Global stocks sink then rally on US elections results
Shares in Asia tumbled as US election returns were tallied but those in Europe and the US recouped losses and advanced.
United States
Stocks rallied Wednesday as investors digested Donald Trump’s surprising victory in the US presidential election. The S&P 500 climbed 1.4 percent while both the Dow Jones industrials and Nasdaq were 1.1 percent higher. Wednesday’s rally came after Trump’s surprise victory spiraled through financial markets overnight Tuesday and into Wednesday morning, sending US stock futures and the dollar sliding and safe havens such as gold and the Japanese yen soaring. The yields on both the 10 year note and 30 year bond surged on expectations that fiscal stimulus measures Mr Trump has vowed to enact would stoke inflation.
Financials led the way higher amid expectations that a Trump administration would ease regulations. JPMorgan Chase and Goldman Sachs Group rallied. Wells Fargo and Bank of America soared. Pharmaceutical and biotechnology groups also performed well. Shares of a number of large US health insurers rose on Wednesday, in the wake of the election of Trump who has pledged to repeal his predecessor Barack Obama’s signature Affordable Care Act legislation. Humana, Aetna, Cigna and Anthem were higher. Pfizer and Merck jumped. Companies gaining on Trump’s plans to boost infrastructure spending included equipment provider United Rentals, Caterpillar and Vulcan Materials advanced.
TripAdvisor fell sharply after the online travel website operator reported weaker than expected third quarter revenues. High definition camera maker GoPro also retreated after announcing the recall of the approximately 2,500 Karma drones after some units lost power during operation. Wendy’s moved higher after the restaurant operator reported better than expected third quarter earnings and raised its full-year guidance.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 95 US cents to US$1,281.40. Copper futures were up 3.4 percent to US$2.46. WTI spot crude was up 53 US cents to US$45.51. Dated Brent spot crude was up 67 US cents to US$46.71. The US dollar was up against the yen, euro, Swiss franc, yuan and the Canadian and Australian dollars. However, it declined against the pound. The Dollar Index was up 0.8 percent. The yield on US Treasury 30 year bond was up 24 basis points to 2.87 percent while the yield on the 10 year note jumped 21 basis points to 2.08 percent.
Europe
European markets sank sharply early Wednesday following the unexpected victory by Republican Donald Trump in Tuesday’s US presidential election. Investors reacted negatively to the election result, due to the uncertainty that a Trump presidency brings. US futures markets plunged late Tuesday, with the Dow Futures sinking over 800 points. However, by the time US markets opened, stocks here had largely recovered their losses. The FTSE was up 1.0 percent, the CAC gained 1.5 percent, the DAX advanced 1.6 percent and the SMI was 2.0 percent higher.
According to the European Commission, increased downside risks mainly due to ‘Brexit’ and uncertain economic trends in China will result in slower growth in the Eurozone. Growth in 2016 was increased to 1.7 percent from 1.6 percent. However, the growth projection for 2017 was trimmed to 1.5 percent from 1.8 percent. The Eurozone economy was forecast to expand 1.7 percent in 2018.
Munich Re rose after its third-quarter profit fell below expectations. Fresenius and Fresenius Medical Care advanced along with Bayer and Merck. In Paris, Alstom climbed after the speed-train maker reported outstanding results for the first half of 2016/17. Sanofi gained. Burberry Group retreated after reporting a 40 percent drop in first-half profit. J Sainsbury dropped after the food retailer warned of lower profits in the second half. House builder Redrow increased after it issued an upbeat trading statement. Brewer Carlsberg declined in Copenhagen despite upgrading its 2016 earnings expectations. Antofagasta and Glencore were higher. Hikma, Shire, AstraZeneca and GlaxoSmithKline gained. US-focused Ashtead jumped. Volkswagen retreated.
September UK visible trade deficit widened to £12.7 billion compared to a deficit of £11.1 billion August.
Asia Pacific
Investors rushed to safe haven assets such as sovereign bonds, gold, the yen and the Swiss franc after Republican Donald Trump emerged as the winner of US presidential election. Stocks plunged on the surprising result.
The Shanghai Composite was 0.6 percent lower after October’s consumer price index edged up for a second consecutive month. The CPI was up 2.1 percent from a year ago. At the same time, the producer price index was up 1.2 percent on the year for its second consecutive positive result after five years of deflation. The Hang Seng tumbled 2.2 percent.
The Nikkei plunged 5.4 percent — the biggest single-day drop since the Brexit vote, as Trump’s surprising victory sent safe-haven assets, including the yen, soaring. The Topix lost 4.6 percent. Exporters such as Panasonic, Sony, Nissan Motor, Toyota, Honda, Hitachi and Mazda tumbled after the US dollar fell more than 3 percent against the yen in early trading. Financials including Mitsubishi UFJ Financial, Mizuho Financial, Sumitomo Mitsui Financial and Nomura Holdings retreated.
Both the S&P/ASX and All Ordinaries tumbled 1.9 percent to close at their lowest level since the Brexit vote. The big four banks were lower along with commodity-related stocks such as BHP Billiton, Rio Tinto, Fortescue Metals Group, Origin Energy, Oil Search and Santos.
The Kospi lost 2.2 percent with concerns about the uncertainty surrounding Trump and disappointing employment data weighing on investor sentiment. The Sensex was 1.2 percent lower.
Looking Forward
France and Italy post September industrial production. The US releases weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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