Immediate winners and losers of President Trump

Immediate winners and losers of President Trump

Risk assets have fallen sharply, safe assets are rallying and the dollar is falling as the Republican party claimed Donald Trump was president of the US.

Mr Trump’s victory over Democrat Hillary Clinton led to sharp swings in financial markets. 

The Mexican peso— seen as the prime gauge of the candidate’s fortunes — tumbled over 13 per cent, its biggest drop since the country’s 1994-1995 devaluation crisis to a record low of 20.7 to the dollar.

The dollar fell 3 per cent against the yen and 2.1 per cent against the euro. S&P 500 futures were down 5 per cent and gold was up 4.1 per cent. Investors marked the odds of a December rate rise down from 84 per cent to below 50 per cent.

Richard Dunbar, senior investment strategist of Aberdeen Asset Management, said it was clear that markets are buckling as a result of the political outsider’s victory and will continue to. 

Mr Dunbar said most investors had calculated that Mrs Clinton would win, and markets are now recalibrating – along fairly predictable lines. 

He said: “There is a natural flight to quality, with assets such as the Japanese yen and gold climbing. Meanwhile those assets most associated with some of Trump's more anti-globalisation and protectionist policies are selling off, with the Mexican peso in the lead.

"A lot of this selling will be irrational, though. Now is the time for cool heads. 

“The US remains the country from which virtually all disruptive technology over the last 50 years has emerged; where the rule of law is sacrosanct; with relatively favourable demographics; and broad and deep pools of capital. None of these things have changed as a result of events overnight."

Eric Lonergan, macro fund manager at M&G Investments, said the US election result was Brexit all over again and showed the surge in anti-establishment sentiment is definitively global. 

Mr Lonergan said: “Brexit can no longer be dismissed as a freak event. It is a trend. Donald Trump looks almost certain to win, by defying his party, the media, and conventional politics. Populism is coming to power. The critical issue now is what this mean in practice.

“The immediate market reaction is predictable. It is deja vu all over again. Like Brexit, will we see a reversal in asset prices in the next weeks or months?

“Even though both houses are likely to controlled by Republicans, this is no guarantee of agreement on his more outlandish policies (building walls and initiating trade wars). 

“He will be pushing on an open door repealing Obamacare and cutting taxes, which are arguably market-friendly, although both are likely harder in practice.

“The critical unknown is whether a Trump presidency pursues the policies of Trump the candidate, in particular his anti-trade, anti-China and anti-Mexico policies. Reason suggests that Congress and financial markets will regulate his ability to act.