Donald Trump’s surprise early success causes a sell-off in equities and the Mexican peso

FINANCIAL markets went into the election night both favouring and expecting a Clinton victory. And the early results seemed to point to success for the Democrat candidate. But as the night wore on, Donald Trump’s position steadily improved and investors started to lose their nerve.

The Mexican peso was the most sensitive emerging-market currency to the election news, given Donald Trump’s promises to build a wall on the border and his talk of renegotiating the Nafta free trade agreement. During the day, the peso was around 18.5/$ and it reached as high as 18.18/$ in early polling. But as the key state of Florida moved from a Clinton to a Trump lead, the peso plunged to more than 20 to the dollar. In contrast, the dollar lost ground against other major currencies, falling 3% against the yen.

A similar reaction was seen in equities. On November 7th, when Clinton’s lead in the polls was strengthening, the Dow…Continue reading

from Business and finance http://www.economist.com/blogs/buttonwood/2016/11/fright-night?fsrc=rss

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s