Traders say Trump’s conciliatory victory speech gave investors hope that he would not immediately embark on some of his more drastic policies

US stock markets reacted calmly to Donald Trump’s shock presidential election victory on Wednesday morning following a worldwide stock market panic overnight.



Wall Street stocks opened slightly higher, despite futures markets earlier predicting a markets rout in reaction to the former reality TV star being elected to the world’s most powerful political position.

The Dow Jones industrial average was 0.08% higher at 18,347 points at 11am. The S&P 500 was down just 0.2% and the Nasdaq 0.3%. At the closing bell, all three indexes posted gains: the Dow stood at 18,589, just shy of a record high close and up 1.4% for the day. The S&P 500 was up 1.1%, as was the Nasdaq.

Traders said Trump’s conciliatory victory speech – which eschewed the crude, divisive and misogynist language used throughout the campaign – gave investors hope that the president-elect would not immediately embark on some of the most drastic policies he has pledged during the bitter election race.

David Kelly, chief global strategist at JPMorgan Asset Management, said he expected Trump to be less aggressive and more pragmatic than he had pledged during the campaign. “The hallmark of a Donald Trump presidency will be a certain amount of pragmatism,” he said during a conference call with investors.

Kelly said it was unlikely that Trump would immediately renegotiate global trade deals – as he had promised – as sparking global panic would be a bad look. “The danger of triggering a recession right at the beginning of your presidency is pretty high.”

Overnight, US stock futures had fallen by more than 5% – hitting a limit preventing further declines. Markets around the world also fell heavily as traders factored in the impact of Trump’s anti-trade rhetoric. The Japanese Nikkei 225 closed down 5.4% and Hong Kong’s Hang Seng fell 2.2%.

European markets also fell in early trading before recovering towards the end of the day. The FTSE 100 was up 0.8% to 7,000 points at 3pm local time, Germany’s DAX and France’s CAC were roughly flat.

US drug companies were among the biggest gainers, as Hillary Clinton had pledged to bring in controls to prevent pharmaceutical companies from hiking the price of drugs following recent scandals. Shares in Pfizer, the world’s largest drug company, were up 7%.

Shares in America’s biggest private prison operator spiked by more than a third as traders predicted that Trump may row back the US government’s decision to phase out the private sector after finding it is failing prisoners. Shares in Corrections Corp Of America (CCA) were up 41% and rival Geo Group shares were up 18%.

Construction companies were also up strongly as they expect more work from Trump’s pledge to build a wall along the southern border with Mexico and embark on a massive program to repair and improve America’s ageing infrastructure. Shares in construction equipment company Caterpillar were up 7%.

Banking stocks also performed well as traders speculated that Trump would follow through with his pledge to tear up red tape and relax regulations.

Among the fallers was Time Warner, whose shares fell 2% due to concerns that Trump will honour this promise to block the media company’s $85bn takeover by AT&T. During the campaign, Trump said the deal would result in “too much concentration of power in the hands of too few” and could “destroy democracy”. AT&T’s chief financial officer, John Stephens, said he was looking forward to working with Trump and “optimistic” regulators would still approve the deal.

Smith & Wesson stocks dive as Trump victory eases gun control fears Read more

Gun companies’ stocks also fell as the election of Trump removed fears that Clinton may have done more to bring in gun controls. A Democratic victory would probably have sent gun enthusiasts out to buy more weapons out of fear they might not have been able to in the future. Shares in the two biggest listed gun companies, Smith & Wesson and Sturm Ruger, were both down 12%.

The dollar recovered after falling overnight, as traders said immediate fears of Trump’s impact on the economy could have been overplayed. By 10am the dollar was down 1.4% against the yen. It was little changed at $1.1033 per euro, having earlier tumbled by 2.4%.



Sterling – which fell to 30-year lows in the wake of the Brexit vote – was up 0.5% to currently at $1.2442.

The Mexican peso plunged by a record 9.3% to 20.2044 to the dollar, forcing the nation’s central bank governor and finance minister to reassure the nation that the country’s finances were safe.

Investors were also beginning to question whether the US Federal Reserve would go ahead with plans to raise interest rates in December. They worry that market turmoil following the shock election result could cause the central bank to keep rates on hold.

“Market expectations for a rate hike from the Federal Reserve have tumbled to 50%; earlier on Tuesday expectations were more than 80%,” Kathleen Brooks, research director of City Index, said. “The Fed is unlikely to hike interest rates if we see a sharp and prolonged decline in the stock markets, on the back of a surprise Trump win.”

Credit ratings agency Fitch warned that a Trump presidency could lead to a “substantial fiscal deterioration” in America’s public finances. Fitch analysts said Trump’s tax cuts would provide an increase in disposable income that could boost short-term consumer spending, but would fail to make up for declines in tax income and lost trade.



“The fiscal impact of the Trump plan would be negative for US sovereign creditworthiness over the medium term, as tax cuts alone cannot generate enough growth to make up for the loss in revenue,” Fitch analysts said. “The risk of substantial fiscal deterioration, and of deteriorating coherence and credibility in economic policymaking, remain the key rating sensitivities.”

The gold price, which had spiked by 5% overnight to $1,337.40, eased back down below $1,300 on Wednesday. “Mr Trump managed to sound quite conciliatory and presidential in his victory speech this morning,” Mitsubishi analyst Jonathan Butler told the Reuters Global Gold Forum on Wednesday. “There was none of the harsh rhetoric that we heard during the campaign.”

“This calmed the markets and helped boost the dollar, eroding gold’s gains,” he said. “[But] the Trump win is still essentially bullish for gold.”

The oil price was little changed, with US and Brent crude flat at $44.94 and $46.01.