Donald Trump’s lead in the race for the White House has Dow Jones futures falling fast, and that’s not all.
Loses continued in Asian markets as Japan’s Nikkei 225 index dropped over six per cent, with South Korea’s and Hong Kong taking a similar hit amid concerns that a Trump presidency would mean scrapped trade agreements.
The Mexican peso has fallen 10 per cent against the U.S. dollar. Dow Jones futures are down over 800 points.
Business analyst Robert Levy weighs in on these significant drops.
“The S&P selling off 5 per cent, the Mexican peso, which investors had been looking to as a proxy in the prospect of a Trump presidency because of, obviously, the implications for Mexico and protectionism policies with the United States, you know, the Mexican peso up thirteen and a half per cent… I mean this is severe under pricing of the expectation of what was going to happen tonight, and investors got this one wrong, plain and simple.”
The largest DOW Jones loss of all time is -777 points. It is currently down -793 and the markets aren’t even open yet!— Jeff Cannata (@jeffcannata) November 9, 2016
The Dow is down more than 800 points. This is potentially just the beginning of how bad this could be. #ElectionDay— deray mckesson (@deray) November 9, 2016
This isn't a football game or The Apprentice. The DOW is now lower than it was on 9/11. Sit back & watch your retirement funds tank tonight— Taryn Southern (@TarynSouthern) November 9, 2016
So, what’s next?
Levy says he doesn’t expect trade agreements like NAFTA to immediately be scrapped with a potential Trump victory.
“This is the reaction because everyone’s so afraid because there was such little clarity of what happens with a Trump presidency… [saying] NAFTA’s out the window, that’s the reaction from the mainstream is that trade agreements go out the window because that’s what sort of Trump rallied on and got people excited about, but in reality… you don’t expect to see a trade agreement like NAFTA that’s been around since the early nineties just go out the window. There might be some renegotiations, ongoing negotiations with the Trans-Pacific partnership might take a little longer to play out because Trump wants more benefits for America and rural America.”
And the rural American voter really came through as the election results came in. Levy says that’s where to look for answers.
“That to me is the takeaway of all this, that economic situation in the U.S. is basically under-priced from a metropolitan standpoint versus what happens in rural America and who the Republican party is now speaking to and who favours them and that’s what they’re looking to govern with.”
With all the losses, gold still came out on top as election results rolled in: climbing nearly 5 per cent. Levy says that’s to be expected.
“People buy gold when uncertainty is peaking, when they don’t know the economic outcome or what’s to come next. When there’s fear in marketplaces that’s when they go to gold. So, you know, the gold business will be very active because gold is a way where investors can come in and hedge their bets for a little while because gold will react positively when there’s either unknowns in the economy, or they expect the economy’s going to turn down.”
Levy was speaking with Charles Adler on Corus Radio’s America Votes 2016.