Stock Markets Nosedive After Shocking Presidential Results
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As the presidential election outcome was being played out Tuesday evening into Wednesday morning, the financial market took a nose dive. On Monday, investors betted heavily that Democrat Hillary Clinton would be the next president of the U.S.
However, Republican Donald Trump earned more votes than polls predicted he would and, because of that, the markets had a violent reaction to the change.
It pretty much shows that financial markets demand stability and certainty. It didn’t matter what it was – currencies, equities and treasuries, there was a 30 percent spike in the CBOE Volatility Index, a tool that shows investor fear.
Japan’s Nikkei Index dropped over five percent. In pre-opening dawn trading for Dow futures, it had dropped 4.6 percent but had recovered over half of the losses as the night progressed.
The presidential race shocked the markets just months after people in Britain decided it would lead the European Union with its Brexit vote. All during summer and the fall, the markets in the U.S. had stayed quiet with investors feeling confident Clinton was going to become the first lady president.
In late October, stocks began to drop after the FBI opened its investigation once again into Clinton’s email server.
For nine days straight, the S&P 500 decreased. However, the sentiment turned around when the FBI said there was nothing new and that no additional action would be taken. On Monday, the markets began to turn around, and investors were confident once more that Clinton would win the election.
Investors saw Clinton as a person who had similar economic policies to Obama’s. Trump’s position on the economy is not as clear and businesses don’t really favor his idea of getting rid of the existing trade agreements.
With a plethora of uncertainty, investors have moved money from their stock futures into safer bets. This has led to a rise in Gold, a drop in the Mexican peso and the Japanese yen increasing against the dollar. 10-year Treasuries also dropped.
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