US close: Trump tempers talk in triumph to mollify markets

Although volumes of 'expert' warnings had trumpeted that a triumph for the tangerine-tinged Republican candidate would definitely lead to volatility if not widespread losses and a surge into gold and other safe havens, Wall Street opened fairly serenely before beginning a climb that lasted almost the entire session.

Earlier, Dow and S&P futures and Asian markets had dived into deep losses as the likelihood of a victory for the Aberdeenshire business owner increased overnight, before feeding into a major early plunge in European markets such as the DAX and CAC 40.

But Trump could be given some credit for restoring some initial order. His victory speech, which was conciliatory and given in a markedly less maverick tone with strong calls for unity on a number of issues, seemed to be the factor that brought calm to global markets.

And by the close the Dow Jones Industrial Average was up 1.4% to 18,589.69 points, after futures markets had earlier pointed to an 800-point loss, with the S&P 500 rising 1.11% to 2,163.26 and the Nasdaq also 1.11% to 5,251.07.

Connor Campbell, financial analyst at Spreadex said the stock indices' rise was fuelled by pharmaceuticals over relief their drug prices will not face the anticipated pressure from some of Hillary Clinton's stated policies, with miners and any companies seen as benefitting from Trump’s promised big infrastructure spending.

Markets were also adjusting to predicted rate hikes from the Federal Reserve, where chair Janet Yellen is facing pressure as Trump is certainly not a fan.

"One thing investors have managed to cling on to is the shifting sands of Fed rate expectations, with December now looking increasingly unlikely to many," said analyst Joshua Mahony at IG.

"Amid all the economic uncertainty there is a chance we could see the Fed hold off. However, with the stock market weakness largely dissipating and a new President who has called the Fed corrupt for keeping the rates low to facilitate Clinton’s campaign, there is reason to believe December could still be live."

Having spiked earlier to $1,137, gold futures on the Comex returned to whence they came, $1,277.8 per troy ounce, a rise of just 0.26%.

Oil prices initially retreated, with West Texas Intermediate was down as low as $43 before trimming losses to stand at $45.34 by early evening New York time, with Brent crude up to$46.53 per barrel.

In currency markets, the dollar was down against the pound to 1.2426, up on the yen at 104.44, while the Mexican pared the worst of its losses after plunging to its worst level ever against the greenback earlier.

"Current fears of crazy, destabilizing legislation and international initiatives are overblown," said Berenberg's chief US economist Mickey Levy.

"Eventually, policies may emerge that lift economic growth. The Fed will proceed to raise rates very gradually toward their new normal level and bond yields will rise but only modestly relative to historic levels. There is a history of market over-reactions to regime shifts and subsequent reversals. The biggest lasting changes in response to Trump’s victory will be in Washington, not in financial markets."