70-year old Donald John Trump, the oldest first-term president ever to be elected in the United States, has claimed the White House for the Republicans, sending markets into a tailspin, the devastation of which cannot yet be assessed entirely. A contentious candidate who came from behind Hillary Clinton’s lead throughout the campaign period, Trump has proven to be a voter favorite but not a winner that could rally the markets.
The Mexican peso fell more than 13 percent during Wednesday’s Asian session, breaking past 20 pesos per dollar, its steepest decline since 1994. Gold has seen its biggest single-day gain since the Brexit on June 24, with a 5 percent rise in Asian trading on Wednesday.
With Trump’s victory traders are expecting further volatility to the downside. The presidential incumbent has threatened to restrict imports from countries like Mexico and China which have been long-term trade partners of the United States. This move could hinder global growth and create geopolitical strife and cause a specifically untenable burden on emerging markets that rely heavily on U.S. purchases. The MSCI Emerging Markets index fell 2.9 percent on Wednesday, the first sign of the potential calamity that lays ahead for these delicate markets.
“If Trump wins... there is going to be a long period of uncertainty about what policy initiatives are likely to be enacted, what is going to be the response of the Fed, how are consumers going to respond, and if business is just going to put their hands in their pockets. It may prove to be, ultimately, a buying opportunity if the downdraft is severe enough but I don’t expect markets will bounce back quickly either,” David Joy, chief market strategist at Ameriprise Financial in Boston told Reuters.
Traders should expect to see continued market volatility through the rest of the week and to plan their trades accordingly.
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