Live Blog

How the Markets Responded to Trump's Victory

A round-up of news from the financial world

Lucas Jackson / Reuters

As election results rolled in, global and futures markets responded to the surprisingly close contest by plummeting, with the Dow dropping nearly 800 points. Follow along here for continuing updates on how the world financial markets are responding to the election of Donald Trump as 45th president of the United States.

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Markets in Asia Recover

Toru Hanai / Reuters

While the U.S. election was still being decided on Tuesday night, markets in Asia took a dive during active trading as Donald Trump pulled ahead of projected-winner Hillary Clinton.

But markets in Asia bounced back this morning: An hour into trading, the Nikkei is up 6 percent, wiping out losses from yesterday. Stocks in Hong Kong and Shanghai have also recovered: Both the Hang Seng and Shanghai Composite have soared pass yesterday’s losses. (An odd sidenote: a stock in China which sounded like “Trump Wins Big” rallied while another stock which sounded like “Aunt Hillary” tumbled as votes were still being counted.)

It’s worth watching how investors in China will react to the actual Trump presidency. After all, the candidate has suggested that China’s economic relationship with the U.S. might get a lot more complicated once he takes office. During the course of his presidential campaign, Trump accused China of devaluing its currency (a claim that has been debunked) and unfairly taking manufacturing jobs away from Americans. Trump has also suggested imposing a 45 percent tariff on Chinese-made goods in order to reduce the trade deficit and bring jobs stateside, which would create a trade war between the two nations and undoubtedly affect China’s economic growth.

Reuters reports that Chinese President Xi Jinping congratulated Trump in a message earlier today, stating that he’s looking forward to working with Trump to “uphold the principles of non-conflict, non-confrontation, mutual respect, and win-win cooperation." For now, stocks in China, like those in the U.S., seem accepting of the impending Trump administration.

Closing Time

Richard Drew / AP

At the end of trading hours on Wednesday, it certainly seems that investors have digested Trump’s surprise victory in the U.S. Presidential election.

The Dow, S&P 500, and NASDAQ all rallied back from precipitous drops in the futures markets, with each closing up by at least 1 percent. The reversal was swift and intense—for the S&P the bounce back was largest since the days of the 2008 banking crisis. The Dow closed up 257 points, after diving 800 points last night in futures trading. Many analysts are attributing the market’s fast recovery to the tone of Trump’s late night acceptance speech, along with the potential benefits for Wall Street a Trump presidency could hold. Though Wall Street was expecting a Clinton win, the numbers seem to indicate that it is just as welcoming to the Trump presidency.

Asian markets open in just a few hours, and their performance tonight will either validate election night panic in emerging markets (the Nikkei plunged 5 percent, while the Hang Seng fell by 2 percent), or evaporate in the face of U.S. investor confidence.

For-Profit Colleges Get a Boost

J Pat Carter / AP Photo

Among the winners in today’s stock market: For-profit colleges, which benefited from Trump’s win.

DeVry Education Group is up 9 percent in today’s trading; Apollo Education Group, the company that owns several for-profit institutions—including the University of Phoenix—is up 7 percent; Bridgepoint Education (which was forced to forgive $24 million in student debt by the Consumer Financial Protection Bureau) up 17 percent; and Strayer Education (one of the most successful for-profit colleges) is up 12 percent.

The premise for investor confidence is that for-profit colleges—which have come under intense scrutiny in recent years by The Department of Education for fraudulent marketing, bad results, and saddling students with student-loan debt—might enjoy looser regulatory oversight once Trump becomes President. Afterall, Trump University, which shuttered in 2010, was a for-profit education company. Before Trump is sworn in next year, he will appear in court just after Thanksgiving as a witness in a class-action civil trial over alleged fraud at Trump University.

Investor Bets Big on Trump and S&P, and Wins

Reuters

Bloomberg reports that the billionaire investor Carl Icahn—a long time Trump supporter—left the president-elect’s victory party in the wee hours of the morning to bet $1 billion on the U.S. stock market.

Icahn’s take was that the 100-point drop in the S&P 500 was a temporary and irrational reaction that would soon reverse itself. And it looks like he was right, near the close of trading, the S&P was up more than 1 percent—the largest reversal for the index since the 2008 crisis.

Among Today's Losers: Renewable Energy

Reuters

As Rupert Neate of The Guardian notes, there are secondary market winners given the outcome of last night’s election: private prisons and oil companies.

He writes:

The companies are soaring as analysts reckon that Trump will row back on the Department of Justice’s ruling this summer to phase out privately run jails. The companies could benefit still further from Trump’s plan for the mass deportation of immigrants.

And what about oil?

During his campaign, Trump has pledged to implement what he calls an “America first energy plan.” That plan calls for total energy independence achieved by undoing President Obama’s executive actions meant to curb energy production or emissions in favor of more climate-friendly policies, more exploration of shale, oil, and natural gas reserves, and exploration of “clean coal”.

Conversely, Trump has said that he would reverse the current U.S. commitment to battle climate change, including pulling out of the Paris Agreement. My colleague Robinson Meyer wrote about the potential environmental consequences  of a Trump presidency here, saying:

This could shatter the international consensus on reducing greenhouse-gas emissions, similar to how the second Bush administration’s withdrawal from the Kyoto Protocol effectively ended that treaty’s functional life within the United States. It could enable other countries to abandon their commitments and emit greenhouse gases at much higher rates.

Appropriately, renewable energy stocks are down:

Shares of wind-turbine makers, such as Vestas Wind Systems, and solar energy companies, such as First Solar, both declined during trading.

Stocks React to Trump's Campaign Promises

AP

While markets have rebounded broadly, there are still big winners and big losers today.

At the conclusion of this election, concerns over the diminished power of the second amendment have seemed to dissipate. With Americans no longer concerned that a Clinton presidency would mean stricter gun control laws, the sense of urgency causing some to stock up on arms may have eased, causing a drop in major gun manufacturing stocks, such as Smith and Wesson, which declined by more than 3.75 percent around 12:20pm.

Shares of major hospitals and insurers also plunged, likely on the assumption that Trump will eventually make good on his promise to repeal the Affordable Care Act. Health-care provider Community Health Systems has tumbled almost 30 percent and among insurers, Anthem dipped just under 1 percent, while Centene dropped more than 17 percent.

Sectors whose stocks were poised for a decrease in regulation under a Trump presidency —particularly large pharmaceutical organizations—climbed on Wednesday. Pharmaceutical and biotech companies have been cautious of a Clinton-presidency, based on her campaign promises that she would dramatically rein in drug prices. At 12:30 p.m, Bayer had surged more than 4 percent, while shares of Pfizer increased by more than 7.5 percent and GlaxoSmithKline was up more than 3 percent.

At Noon, U.S. Markets Seem to Have Rebounded

Edgard Garrido / Reuters

On Monday, world markets surged ahead on the projection that Democratic candidate Hillary Clinton would narrowly capture the presidency.

U.S. indicators—the Dow, the Nasdaq, and the S&P 500—rose 2 percent on forecasts predicting a Clinton victory.

But as the tides began to change last night—with Donald Trump pulling an eventual upset to become the U.S. president-elect—the market began to react. For a variety of reasons, markets don’t always respond well to uncertainty. The market shifts  were somewhat predictable: the peso plunged to a record low, U.S. futures dived, Asian markets—particularly the Nikkei which dropped 5 percent by close—also dived, while gold rallied big. Analysts noted that the volatility seen last night was much greater than following the surprising result of the Brexit vote earlier this year.

This is not the outcome investors anticipated, but U.S. markets have since recovered: all three indices are surging ahead gaining nearly 1 percent by noon.

A great paragraph from The Economist about these market movements last night:

So why are the markets worried? First of all, the policy statements of Mr Trump have been both vague and erratic—on issues such as trade, foreign policy, the independence of the Federal Reserve and even the commitment to repay Treasury bonds in full. What is hard to know is how serious his policy proposals might be, and how much Congress would allow him to enact. He has more freedom in foreign policy areas than in the domestic arena. That is why emerging markets might take the greatest hit.