As the votes roll in across the U.S. in a tight presidential election, the Dow Jones industrial average plunged more than 600 points in volatile futures trading as traders reacted to a strong showing from Donald Trump in key too-close-to call swing states like Florida.
Global markets were wildly volatile, with stocks, currencies and bonds around swinging as investors reacted to with a high level of anxiety to the possibility that Republican Donald Trump could best Democrat Hillary Clinton in 2016 U.S. presidential election.
Investors are closely watching how the vote tally plays out. Trump’s strong showing is causing investors to reassess his chances of victory, causing so-called risk assets to fall, as Wall Street had been pricing in a Clinton win the past two sessions.
The Dow Jones industrial average was down more than 615 points, or 3.3%, in futures trading, after being up about 100 points earlier in the session. The Standard & Poor’s 500 stock index was off more than 3.9%.
Trump’s strong showing is causing massive angst in financial markets around the globe, as investors are forced to consider the prospect of a Trump surprise win. Wall Street had been pricing in a Clinton win in recent days, a stance many investors are now rethinking as the race for the White House continues to be too close to call.
“What the market is telling us is that all of a sudden the chance of a Trump win is very real,” says Brad McMillan, chief investment officer at Commonwealth Financial Network. “Trump winning introduces a lot of policy uncertainty,” on issues ranging from trade to immigration to tariffs.
What really has Wall Street worried, McMillan adds, is the prospect of a so-called Republican “sweep,” in which Trump wins the White House and the GOP retain control of both the Senate and House. “A Republican sweep gives Trump a lot more policy flexibility than a divided government would,” says McMillan.
A Trump win would likely result in a steep fall in stock prices when Wall Street opens for trading Wednesday, he says, adding that the market would likely enjoy a relief rally if Clinton can rally back later tonight and win the election.
In early trading in Japan, the benchmark Nikkei 225 stock index was on a wild rollercoaster ride, with shares opening higher, then darting lower than rebounding sharply, before slumping again; it is currently down 2.2%. Shares were also trending lower in Australia, where the S&P/ASX 200 index was down 1.6%. The up and down trading reflects investor reaction to the incoming results in the U.S., with stocks rising when Clinton’s chances of winning rise and slumping lower when early results show Trump still in the race.
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