Markets pummelled as Trump pulls ahead

European markets have pared early losses, after the ASX saw $29bn wiped amid a flight to safety.

Australia’s benchmark index the S&P/ASX200 had plunged 2.1 per cent to 5,145.7 at 2.05pm. Picture: AAP.

Investors have shunned risk assets across the globe after a US presidential election that has resulted in a shock Donald Trump victory.

But sentiment moderated somewhat as the initial shock wore off and Mr Trump vowed to begin the “urgent task of rebuilding our nation and renewing the American dream.”

Futures pointed to a 1.9 per cent opening loss for the S&P 500, more than twice the average post-election day decline of 0.9 per cent. But that marked a partial recovery after futures had earlier tumbled as much as 5 per cent, triggering a circuit breaker, as early results came in and signalled Mr Trump would defeat Hillary Clinton to become the 45th president of the US.

European markets initially opened with a thud, as German’s DAX shed 2.7 per cent while markets in Spain and Italy shed over 3 per cent. The export-heavy auto sector fared worse in the Stoxx Europe 600, shedding over 3 per cent as the euro rose 0.9 per cent against the dollar to $1.1115.

But losses in Europe began to moderate shortly after markets opened, with the Stoxx Europe 600 trading down just 0.6 per cent midmorning. Gains in gold eased.

Investors were also beginning to question the Federal Reserve’s plans to raise interest rates in December, betting that a period of market turmoil following the surprise election result could keep the central bank on hold.

Earlier, Tokyo’s benchmark Nikkei 225 index stocks had closed 5.4 per cent weaker.

Closer to home, the benchmark S&P/ASX 200 index had skidded 102.2 points, or 1.92 per cent, to 5,156.6 by the close, while the broader All Ordinaries index slumped 103.9 points, or 1.94 per cent, to 5,238.3.

The activity wiped $29 billion from the value of the local bourse.

Australia’s benchmark index at one stage plunged 3.9 per cent to a four-month low of 5,053, before paring some of its heaviest losses as the Australian dollar retreated.

It still represented a dramatic turnaround from gains of almost 1 per cent in morning trade.

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The rapid swing was predicated on a strong showing from Mr Trump in key swing states, forcing bookmakers to install him as an almost unbackable favourite in the home stretch of counting.

“The market reaction has been swift and largely in line with our expectations of what a Trump win would mean,” said Capital Economics chief US economist Paul Ashworth.

“This is very much a step into the unknown because we simply can’t know what type of President Trump will be. Will he be the demagogue from the campaign trail, who threatened to lock up his political opponents, punish the media, build border walls and start a global trade war? Or is he capable of becoming a statesmanlike figure who leads in a more measured manner?

“Given the adverse market reaction we have already seen, the Fed’s planned December rate hike is now off the table.”

Meanwhile, the price of gold rocketed as investors sought safety, with the precious metal leaping 2.06 per cent to $US1300.7 by 7.22pm (AEDT), paring gains from a 4.4 per cent high earlier in the afternoon.

Local gold miners surged, with Newcrest jumping 9.8 per cent, St Barbara adding 8.9 per cent, Regis gaining 7.4 per cent and Evolution advancing 11.4 per cent on the day.

Among other local stocks, the big four banks fell broadly in line with the benchmark, with Commonwealth Bank the best performed by sliding 1.6 per cent, despite an historic ‘first strike’ on executive pay, and ANZ lagging due to a 2.1 per cent retreat.

The big miners readily gave up early gains, with BHP Billiton surrendering 3.2 per cent to $22.56, Fortescue yielding 2.5 per cent to $5.43 and Rio Tinto weakening 1.9 per cent to $53.73 amid news of two executives seeming being forced out in response to a payments scandal.

In energy, Santos nosedived 7.5 per cent to $3.44 as oil prices slid, while Woodside lost 2.4 per cent to $27.88.

Forex moves were similarly sharp, with the Mexican peso — seen as a proxy for the result — plunging 13.5 per cent to a record low against the US dollar, given Mr Trump’s hardline approach to the country.

The Australian dollar tumbled from a six-month high around US77.8 cents at midday, to dip below US76c for the first time in two weeks. At 6pm (AEDT), the unit had regained some ground, to trade at US76.49c.

Emerging market currencies were tumbling thanks to the risk aversion activities, while commodities were also caught in the crossfire as crude oil skidded 3.5 per cent in Asian trade and the broad Bloomberg commodities index lost 0.7 per cent.

Mr Trump’s ascension to favouritism as the vote results became clear remarkably represented the first time he had been viewed by bookies as the favourite through a tediously long election campaign.

The stunning turn of events saw Trump’s odds shrink from $12 at midday to a clear $1.01 favourite by 4.15pm (AEDT). In contrast, Hillary Clinton’s odds swelled from an almost unbackable $1.10 to an unloved $15.

with Dow Jones