Markets Enjoy Surprising Rebound
Asian shares rebounded on Thursday following Wednesday’s steep declines and erasing fears that Trump’s presidency would wreak havoc on the markets. The MSCI index of Asia-Pacific shares outside of Japan rose 1.8 percent while the Nikkei recovered all of Wednesday’s losses and rose an additional 6 percent. Australian stocks rose 2.8 percent, the largest daily gain since late 2011.
The dollar traded against the yen with an unusually wide range, fluctuating from a low of 101.19 yen to a high of 105.96 during Thursday’s Asian session. The dollar’s boost came from a change in outlook regarding a potential Federal Reserve rate hike, which analysts now believe is 80 percent likely to happen next month.
U.S. markets also showed remarkable buoyancy on Wednesday. After plunging 5 percent during Wednesdays Asian session, the S&P 500 closed up 1.1 percent, as did the Nasdaq. Safe haven gold which had hit a high of $1,337.40 per ounce on Wednesday, pulled back on Thursday to $1,287 per ounce after the markets showed surprising confidence in Trump’s victory. Copper, in turn, hit a near 16-month high with expectations that if Trump makes good on his campaign promises, there will be a dramatic increase in infrastructure spending.
The Mexican peso which sunk dramatically after Trump’s win was announced, pared its losses after Trump’s victory speech left out any mention of the Mexican barrier wall, but the currency was still trading near all-time lows. Mexican President Enrique Pena Nieto called to congratulate Trump and expressed hopes that the neighboring countries could collaborate to strengthen the greater North America. Mexican Foreign Minister Claudia Ruiz Massieu followed the call with a public statement confirming Mexico’s stance that it will not pay for Trump’s proposed wall, but that it was looking for other ways to work together to solve mutual challenges.