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Markets regain their poise as ‘Trump dump’ runs out of steam

  • FTSE opens down but recovers
  • Mining stocks and pharmaceuticals prosper
  • Chance of US interest rate rise falls back

Global stock markets initially sold off as Donald Trump’s election to President gathered speed this morning. The Nikkei 225 fell 5%, though after the index closed, futures markets showed signs of recovery.

Indeed this has so far been the pattern across most markets, with an initial knee-jerk reaction moderating as investors take stock, so far at least- it is still early in the trading day.

The FTSE 100 opened 2% down but at the time of writing is trading just a shade lower than its closing value last night. S&P 500 futures suggest the US market is going to open down around 1.5% at 2.30pm this afternoon (GMT).

On the currency markets the dollar has fallen against the pound and the yen, while the Mexican peso has fallen against the dollar, though again there has been some moderation of these rends.

Gold has risen $20 to around $1300 an ounce.

Meanwhile the chance of a US interest rate rise in December has been pared back from around 80% to 50%.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown:

"Initial stock market reaction to the Trump victory was a short intake of breath, followed by a shrug. The Japanese market was the biggest faller, shedding around 5% thanks to the appreciation of the yen, with European markets also opening a few percent lower this morning.

However there has already been a bounce in stock indices, suggesting that even the most powerful office in the world holds only limited sway over global capital markets.

The FTSE 100 was included in the early morning sell-off, but the reaction of the UK stock market was much more muted than in the immediate aftermath of the Brexit vote. The market opened 2% down, but has since staged a recovery to trade a little under yesterday’s closing price, with the FTSE 250 actually bouncing back into positive territory.

Mining companies are winners on the Footsie so far, in particular Fresnillo. Shares in the precious metal miner have risen by almost 10%. That’s because the price of its products, gold and silver, have risen, while the costs of its mining operations in Mexico, have fallen thanks to the drop in the peso. Pharmaceutical companies have also seen their share prices rise, as Clinton’s attacks on drug pricing are now no longer in the ring.

The dollar has proved to be a casualty of a Trump win, so far at least, as markets have slashed forecasts of a US interest rate in December, the chances of which have now been pegged back to fifty-fifty."


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