Dow Jones hits record high on Trump stimulus hopes - as it happened

Graeme Wearden in London (now), and Martin Farrer

from on 2016-11-10 21:08 (#2115A)

Shares in mining companies, defence groups and banks rise, but tech stocks sliding as US presidential election continues to move markets

Latest: Dow Jones hits new high
US banks rally but tech stocks hit
FTSE 100 hit by stronger pound
Bond yields jump on Trump inflation fears
Larry Summers: Trump needs to propose serious plans
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9.15pm GMT

It's official! The Dow Jones industrial average has closed at a new alltime high, as Wall Street continues to assess the impact of Donald Trump's election victory.

After another day of volatile trading in world markets, starting with big gains in Asia, the Dow ended the day up nearly 1.2% at 18,807 points.

The Dow climbs 211 points to close at an all-time high https://t.co/xz8QWOYgW4 pic.twitter.com/FF0aRfBjkF

Amazon.com Inc. fell 3.8 percent to lead the rout in technology. JPMorgan Chase & Co. jumped 4.6 percent and Goldman Sachs Group Inc. climbed 4.3 percent. Drugmakers advanced, led by Pfizer Inc.'s 4.3 percent rally. Caterpillar Inc. added 2.5 percent. Procter & Gamble Co. plunged 3.5 percent.

6.09pm GMT

The Dow is pushing higher, after Donald Trump and Barack Obama have their first meeting since the election.

It's their first face-to-face meeting ever, in fact, Trump told reporters as the two men sat side by side, looking perfectly polite and rather serious.

Obama said the number one priority was to ensure a smooth transition, so Trump could be a successful president.

"If he succeeds, the country succeeds," Obama said.

WATCH: President Obama and President-elect Donald Trump discuss their first meeting together at the White House. pic.twitter.com/OVDSgHyEXx

5.50pm GMT

Capital Economics says investors are still in the dark about Donald Trump's plans:

There is clearly still a large degree of uncertainty regarding the economic policies of the incoming Republican administration.

However, investors appear to be concerned about the inflationary consequences if Mr Trump were to pursue protectionist policies alongside a sizeable fiscal expansion at a time when there is a limited degree of spare capacity in the economy.

5.33pm GMT

After three hours of trading, the Dow Jones industrial average is still on track to hit a record close.

Pharmaceutical firms, banks and manufacturing companies are all leading the rally, on predictions that they'll benefit from Trumponomics.

5.25pm GMT

5.24pm GMT

Here's the story of how the Dow defied forecasts and spiked after Trump's victory:

5.04pm GMT

A new burst of volatility has driven the pound up against the US dollar, triggering a late selloff in London.

Sterling is now up 1% at $1.251, as the markets continue to be buffeted as investors come to terms with Trump's success.

Steeper yield curve is really helping US bank stocks. pic.twitter.com/kmwSG5sqQj

Massive moves on the #FTSE100 in both directions this afternoon. pic.twitter.com/GRiXXkq0UN

4.45pm GMT

The International Monetary Fund says it is looking forward to working with Donald Trump, and isn't prejudging him.

Spokesman Gerry Rice told a press briefing in Washington that it's "too early to speculate" about whether Trump would hurt the global economy.

"We need to wait and see what the policies will actually be and we'll be making an assessment at that time."

4.17pm GMT

European stock markets are heading lower in late trading, as Trump-inspired volatility grips the City again.

4.14pm GMT

The S&P tech stock index has shed 3%, and is on track for its worst day since the Brexit vote (via Reuters).

3.44pm GMT

Technology shares are suffering a Trump slump today, as investors calculate that Silicon Valley could suffer under the next president.

Shares in Amazon, Netflix, Alphabet (Google) and Facebook have all fallen by at least 4%, and Apple and Microsoft are in the red too.

$NDX $Nasdaq tanking, down nearly 2% against a flat $SPX. FANG stocks weighing heavily. $FB -4.5%, $APPL -2.5%, $NFLX -5%, $GOOGL -4% WM pic.twitter.com/u2pxcT101t

3.32pm GMT

Investors large and small will be relieved that Wall Street hasn't crashed since Donald Trump pulled off one of the most surprising election results of the age.

The first will be for him to build a strong cabinet, with respected figures in key posts of Treasury Secretary and Secretary of State. Second, he needs to continue to give voice to the calmer, more gracious version of himself that was on display in his election night acceptance speech.

No-one should expect him to repudiate everything he said in the campaign about open borders and trade deals such as the Trans Pacific Partnership Agreement. But the third test for the President-Elect will be to demonstrate that he does not plan to tear up the parts of the Washington establishment that are actually working quite well - notably, the US Federal Reserve.

The combination of looser fiscal policy and increased uncertainty over globalisation would be likely to mean a stronger dollar and potentially higher US inflation and higher interest rates. That is not a hugely helpful combination for the rest of the global economy, especially emerging markets. But that, too, is uncertain and could take time to materialise. In the meantime, my colleagues and I are not predicting a radically different path for the US economy following this result - or for US interest rates.

This is about the kind of country that America wants to be.

At the heart of Donald Trump's appeal was a promise to make it a nation that works better for the mass of voters who feel they have been left behind by globalisation and by the global financial crisis. For better or worse, that is the standard by which every developed country politician will increasingly be judged. Whether Mr Trump will actually deliver with on that promise is another matter."

3.00pm GMT

Let's be honest, most analysts had predicted heavy losses if Trump won the presidential election. And most analysts were wrong.

2.57pm GMT

Banks stocks are rallying this morning, with JP Morgan up 4% and Goldman Sachs gaining 2%.

They're benefitting from speculation that the Republicans could ditch Dodd-Frank, the legislation brought in to avoid a repeat of the financial crisis.

2.42pm GMT

New all time high for the Dow Jones index as investors continue to welcome Trump's apparent pro-business stance.

2.40pm GMT

Boom! The Dow Jones industrial average has hit a new intraday record high, as the Trump bump reached New York.

Shares have risen at the start of trading in Wall Street, adding to yesterday's rally, and defying predictions that markets would slump if Republicans won the race for the White House.

Before yesterday morning Trump was toxic yet now, following a vulgarity-free victory speech and back-peddling comments about Janet Yellen's position at the Fed, he is the biggest turn-on the market has seen in months.

2.27pm GMT

Never mind mere stagflation, the markets are being spooked by a new and scary-sounding beast. Trumpflation!

The Financial Times has coined this term, to explain the big selloff in bond prices today.

"Under a Trump presidency we are more likely to see fiscal expansion that drives growth and markets are reflecting that.

"There was already latent inflationary pressures from the jobs market - Mr Trump's election has added fuel to that. Long term inflation expectations are rising and that explains why bond yields are rising and the yield curve is steepening."

'Trumpflation risk' - not a phrase i'd ever have envisaged existing: https://t.co/6CB4RtZ4hG via @FT

2.05pm GMT

Alan Greenspan, the former head of the Federal Reserve, fears America is entering an era of stagflation -- rising prices, but little real growth.

He's been speaking on CNBC:

Greenspan repeats his warning of stagflation: inflation will pick up and boost profit margins but that will be a "false dawn" @CNBC

"I'd love to see Dodd-Frank disappear.

Former Fed Chair Greenspan says 'I'd love to see Dodd-Frank disappear' https://t.co/p3WoT0jb5t

1.58pm GMT

Ouch! A nasty selloff is underway in the government bond market right now.

The price of debt issued by countries such as the US, the UK and Germany is falling sharply, driving up the interest rates (or yield) on the debt.

Pledges of massive U.S fiscal spending have heightened expectations of Trump implementing fiscal stimulus measures, including tax cuts which may bolster profit growth consequently boosting inflation.

Mr Bond is in serious trouble pic.twitter.com/HxtLKDgkfd

Most scary chart for bond investors: Price of 30y German bonds have plunged by 14% since summer 2016. pic.twitter.com/v0XMgXQOPs

1.24pm GMT

Investors may be taking a big risk by deciding that Donald Trump will become a new man once he crosses the seal in the Oval Office carpet.

The 'Trump bump' has been based on a somewhat breezy assumption that the new president will successfully implement the debt-fuelled infrastructure programme that many experts support, while ignoring the chance that we actually enter an era of painful protectionism and trade wars.

The markets seem to have decided that [aggressive deficit-financed state spending] will indeed now happen - stocks up, commodities up, bonds down. Indeed, the markets seem to have decided that President Trump will be a relatively normal President, even if candidate Trump was a deeply unusual candidate. I'm not so sure.

To adapt a a phrase: "demagogues can stay irrational longer than you can stay solvent".

Implicit in that line of analysis are assumptions about the Fed's reaction functions and about productivity growth that need to be questioned. And, crucially, it misses the biggest shift that Trump's Presidency could bring about - a rejection of "globalisation"/economic openness.

Post: Political Economy & Trump's Trilemmas https://t.co/Q2hVD1azfn - a long-ish read.

1.11pm GMT

Hello.... the rally in European stocks is petering out.

The FTSE 100 has now shed its early gains and is now down 6 points, having been up 50 points at the start.

12.53pm GMT

Larry Summers, the former US Treasury secretary, is cautiously hopeful that the infrastructure plan proposed by Donald Trump could help the US economy.

12.22pm GMT

Demand for gold hit a record high yesterday, which tells you a couple of things.

1) There was a massive flight to safe-haven assets as the shock election result rocked Asian and European markets.

Somehow, it seems that yesterday was a busy day for #gold: COMEX aggregate gold trading volume hit a record high (h/t @EdVanDerWalt) #Trump pic.twitter.com/TC03csJ6Mw

12.15pm GMT

Over in America, Donald Trump is preparing to visit the White House to meet president Obama, following a night of protests against his election victory.

Our main liveblog is covering all the details:

12.11pm GMT

Catherine Mann, the chief economist at the Organisation for Economic Co-operation and Development, says Donald Trump needs to flesh out his economics plans, fast.

That's what got him to the White House , the fact that the gains aren't widely shared.

11.46am GMT

The deputy leader of Germany's governing CDU party, Michael Fuchs, hopes that president Trump will be more responsible than nominee Trump:

just wait and see #trump- he already made a change of behavior now that the elections are over @flacqua @BloombergTV @bsurveillance pic.twitter.com/jeaTG1jbgE

free trade is crucial for Germany and the world - I think #Trump will be pragmatic @flacqua @BloombergTV @bsurveillance

11.21am GMT

The copper prices has hit its highest level since July 2015, up 5% today, thanks to Trump's promise to rebuild America's infrastructure.

And shares in two mining companies, Antofagasta and Vedanta, have both soared by 14% as investors anticipate a new fiscal boost next year.

President elect Donald Trump's pledge to spend more than $500 billion on rebuilding America'sroads, bridges and airports helped send construction and steel stocks sharply higher following his surprise election win.

All that we see for President-elect Trump is that he will focus on building, he will focus on the infrastructure.

"That is what the market is reacting to."

Whopping gains for the copper miners today https://t.co/0ZBDERxcTG pic.twitter.com/SipIO5PAFq

10.45am GMT

Trump's victory is also driving up the shares of military and defence companies.

10.26am GMT

Here's confirmation that inflation expectations are rising, via analyst Arne Petimezas of AFS Group:

Reflation trade is on pic.twitter.com/gmbUfq65VI

10.17am GMT

Predictions that Donald Trump's policies will drive US inflation higher are causing some dramatic moves in the financial markets today.

The interest rate, or yield, on Britain's 10-year government bonds just jumped over 1.31%, up from 1.23% on Wednesday night. That's the highest level since 24th June, the aftermath of the Brexit referendum.

https://t.co/WdZyqK7uMX pic.twitter.com/OVoZm0X9Ea

9.38am GMT

The news overnight that Donald Trump doesn't want to force Federal Reserve chair Janet Yellen to resign has also cheered the markets.

Yellen's first term expires in 2018, but there has been speculation that she might feel pressure to step down, given the attacks from Trump during the campaign.

If she goes, who knows, because that depends on who comes in next.

9.22am GMT

China's foreign ministry spokesperson has been giving some more reaction to Trump's victory at a press conference in Beijing.
Asked about Trump's vows to introduce a 45% tariff on Chinese imports, spokesperson Lu Kang noted that economic ties were blossoming with trade increasing from $2.5bn in 1970 to $560bn last year.
"Economic cooperation between China and the US is what has made our bilateral relations stable and has propelled our bilateral relation forward," Lu said.

"I hope US is able to view our economic trade relationship in an objective and unbiased manner and work with us so that we can move forward. I believe that if the US keeps the country's interest and its people's interests in mind, they will make the right decision".

"I will not comment on speculation. As I said I believe that the US's leaders will make their decision based on the fundamental interests of their people.

9.17am GMT

The Dow Jones industrial average is on track to hit a new record high, when the US stock market opens in five hours.

Last night, the Dow closed near to its highest levels, and the future market is predicting a fresh spike today.

The Trump honeymoon continues for U.S. stocks today. Dow futures are rallying 130 points, S&P futures are up 0.7% and Nasdaq is rallying 15 pic.twitter.com/V03ybEac6j

Major moves in the out of hours index market: Dow currently 160 points higher than last night's close, trading at 18,750, an all-time high.

9.09am GMT

The prospect of tax reforms and a government spending boost are pushing shares up, says Jeremy Cook of currency trading firm World First.

He says the intial Trump slump has swiftly transformed into the Trump jump:

The shortening of the timeframe between decline and rebound could be down to many things but issues around full Republican control of the Presidency and the possibility that changes in tax reform, investment and regulation will come through quicker may help.

Trump has also been called 'an inflation time-bomb' given his pledges to increase spending so we must now look at Fed policy through a new lens. Similarly, although he was elected yesterday he does not take the reins until January 20th.

World First Morning Update November 10th - Trump slump turns into Trump jump - https://t.co/iYXztyUTXq

9.06am GMT

Well quite:

If the market's going to rally every time Trump rows back on some ludicrous campaigning point, there's no limit to where we could end up.

8.50am GMT

Investors are hoping that taking on the presidency might provoke a change in Donald Trump.

Mike van Dulken of Accendo Markets says the market rally is based on:

...an reassessment of views about Trump and belief that a more Presidential individual is already replacing the highly divisive candidate character he merely portrayed in order to appeal to American frustration and win the populist vote.

Markets are demonstrating an impressive ability to digest significant political change and move on, even quicker than we saw in the immediate aftermath of the UK's Brexit vote.

Markets are looking to jump on any positives rather than negatives

8.33am GMT

Anyone who bought European shares during Donald Trump's victory speech yesterday morning has made a decent profit.

The markets have now gained 4.6% since Wednesday's opening tumble:

Stoxx Europe 600 up about 4.6% from its post-election low right now. pic.twitter.com/flLRQRxBrE

8.27am GMT

European banks are also rallying, on speculation that the next president might unravel some of the regulations brought in since the 2008 crisis.

During the campaign, Donald Trump promised to tear up Dodd-Frank -- the legislation brought in to protect consumers and prevent banks becoming too big to fail.

"We have to get rid of Dodd-Frank. The banks aren't loaning to people that need it. The regulators are running the banks."

EVERY European banks in the green today...hopes of higher rates & lower regulation post Trump pic.twitter.com/h2PFZ52MxV

8.16am GMT

Coper-producer Antofagasta is the top riser in London, with fellow miners Glencore and Anglo American close behind.

Traders are betting that Trump's programme of cutting taxes, a new debt-funded infrastructure programme, would push up inflation and raise demand for commodities.

8.09am GMT

European markets are open, and shares are rising, as predictions of a Trump slump are trampled in an early wave of buying.

The FTSE 100 index has jumped by 49 points, or 0.7%, to 6960 in early trading. Mining stocks and financial companies are leading the way.

7.56am GMT

The City analysts who predicted markets would slump if Trump pulled off a shock win have some explaining to do today.

The consensus view was that Trump's sheer unpredictability, opposition to free trade, bombastic and often-shocking comments - plus the vague and uncosted nature of his proposals - would scare investors out of town. But instead, we got a knee-jerk selloff yesterday, followed very swiftly by a bounceback (which Asia just caught up with.)

Buy the rumour, sell the news or in this case, sell the rumour and buy the news. We were all told this when we first arrived in dealing rooms and it is used to explain why academics and non-market participants are so often confused by the reaction of markets to events.

I'm not sure I can remember a better example of this maxim than the last week's market reaction to changing speculation about the outcome of the US Presidential election, and then to what happened. The result is plenty of egg on the face of all sorts of people. Mine included.

It is widely expected that President Trump will be able to enact tax cuts, particularly for corporations, that will be positive for growth and will boost inflation.

7.34am GMT

Good morning from London, where bleary-eyed traders have returned to their desks.

The European opening calls suggest there might be just a little more juice in the tank - FTSE +22, DAX +21, CAC +9 courtesy of IG at 5.06am

7.03am GMT

A huge recovery on Asia Pacific's stock markets as the region followed the lead of the US and Europe. Plenty of commentators have doubts about whether the upbeat impact of Trump's victory can be sustained across the region but the impact is overwhelmingly positive for now.

Here are the main points of the day so far:

6.42am GMT

Oliver Holmes, our south-east Asia correspondent, has been looking at the impact of Trump's win on his business interests in the region.

Oliver writes:

Despite the global downturn, two companies in the Philippines and Indonesia that are linked to Trump saw their shares soar on news that he had been elected president.

Shares in a Philippine firm building a 57-storey Trump Tower in Manila jumped by a massive 20%, from 1.22 to 1.47 US cents on the local stock market. The main index on the Philippine Stock Exchange fell, however, by 2.5%.

6.39am GMT

A huge day for the Japanese stock market which soared 1,092.88 points to 17,344.42, a rise of 6.72%.

6.14am GMT

There have been big moves in the bond markets in the past 24 hours as investors have dumped the safety of government paper in favour of equities and the dollar.

After Trump's win, Pimco and other bond traders are seeing fast-tracked Fed. https://t.co/3iQxd6y3Xr pic.twitter.com/hmdRuZF1AC

An astonishing turnaround in risk appetite pushed equities and Treasury yields higher. Markets appeared to reassess the economic outlook under Trump, towards one of higher growth and higher inflation.

5.59am GMT

Futures trading suggests Europe and the US will rejoin the party when the markets open later today.

Spread better IG sees the FTSE100 up 0.5% at 6940 points, while the Dax in Germany will be up 0.68% at 10,715 points.

5.53am GMT

The Nikkei has gone even better than the ASX today with a rise nearly 7%, helped by a drop in the yen as the US dollar received a Trump bump as we might now have to call it.

But the authorities are still worried that they might have to act to keep the yen down in future.

If Japan hesitated to intervene out of deference (to Trump), it would not be able to act for the coming four years.

5.44am GMT

Toot toot!

AUSTRALIAN STOCKS RIDE THE TRUMP RALLY: What you need to know (via @BIAUS) https://t.co/gf8DoGW10W

Biggest gains on the ASX200 today: $ACX up 13.7%, $SGM up 13.6%, $BSL up 13.5%, $WSA up 12.1%, $CPU up 12% #ausbiz

5.37am GMT

It's been a good day for investors down under - the best in fact since 2011, AAP reports.

The ASX/S&P200 has closed up 172.2 points, or 3.34%, at 5,328.8 points, adding $50bn to the market's value, more than making up for yesterday's losses.

5.21am GMT

There's a lot of commentary around today about Trump's trade policies and what they will mean for the global economy.

We've already heard from JP Morgan and Saul Eslake. And here's Paul Bloxham from HSBC in Australia, speaking to Australian Associated Press.

For Australia, the main negative impact seems likely to be the effect that reduced global trade could have on Asian growth, given Asia's high trade reliance. Continued strengthening of Australia's economic ties to China should be a priority as it would help support local growth even in the face of rising global trade protectionism.

It is plausible that the new administration will not ramp up tariffs on Mexican and Chinese imports, content instead to bury the prospect of new trade agreements and make more use of enforcement clauses in existing agreements.

4.53am GMT

Trump won't force Janet Yellen to resign as chair of the Federal Reserve, according to an adviser, despite speculation that he might try to end her term prematurely.

Judy Shelton, an economist and senior fellow at the Atlas Network and adviser to Trump on monetary policy, told the Wall Street Journal that "he's not urging her to resign at all".

He's saying he'd want someone whose thinking is more in keeping with his own.

4.29am GMT

JP Morgan's team in Australia have been looking at what Trump's win could mean for the global economy - and Australia's.

They say that a US fiscal stimulus would have limited benefits for the rest of the world while trade barriers could mean trouble for trading partners.

A US policy-induced trade shock will be negative for global growth. This leaves risks to global growth more asymmetric than was previously the case. Second, the distribution of risks to Chinese growth have shifted to the downside, given the increased probability of rising tensions in US-China trade relations and weaker Chinese export growth.

A marked slowing in US growth might not be an issue, except that growth in the rest of the global economy doesn't look robust enough - particularly given limited scope for additional policy support - to provide much of a buffer. And even in the event that US growth slows on a trade shock, this will likely be more inflationary (via higher import prices) than would have otherwise been the case, meaning that the growth and inflation trade-off in the US becomes less favourable.

For the RBA, we think this underscores the risk that rates are likely to go lower in Australia. All else equal, domestic growth needs to be stronger to provide an offset to external shocks, should they occur.

4.02am GMT

US billionaire Carl Icahn apparently cashed in on the stock market panic over Trump's election victory.

The longtime Trump supporter told CNN Money that he left the Republican's victory party in Manhattan in the early hours of Wednesday to go home and buy "a lot of stock" in the plunging overnight market.

I'm glad I did that. I guess that's what makes me happy today too ... I personally don't believe that Trump is bad for the market necessarily.

3.21am GMT

OK, the stock markets have proceeded magisterially today despite a background of major tectonic shifts in the financial landscape.

Here are the main points:

3.08am GMT

More on the implications for Asia's big emerging economies - and Australia.

Saul Eslake, the independent economist, has warned about the implications for Asutralia if Trump were to start a trade war with China and undermine the Fed, pushing the US dollar down.

[This would create] a great deal of uncertainty in our part of the world, about the geopolitical environment by making a less wholesome commitment to longstanding US alliances with countries like South Korea and Japan ... Those things, particulary a trade war with China, would be highly negative for Australia.

Saul Eslake: the Australian economy will be negatively impacted if @realDonaldTrump starts a trade war with China https://t.co/gvPVUtJ8pM

2.55am GMT

Like every measure in the last 24 hours, the US dollar has been topsy-turvy. The chance of a Fed rate cut dropped to 30% on Wednesday but is now more than 80%, according to IG.

#Fed to proceed with December U.S. rate rise despite #Trump upset: @ReutersPolls https://t.co/Jt0UCpNHT5

We expect a Trump Treasury to elevate the importance of the bilateral trade surplus with the US in identifying currency manipulators and intensify pressure on trade partners to allow currencies to appreciate.

2.39am GMT

The yuan has been fixed today at 6.7885 - its lowest point since September 2010.

Bearing in mind that Trump labelled China a "currency manipulator" on his way to winning the presidency, the issue could prove to be a flashpoint between the two countries.

Chart: Renminbi (USD/CNY) 1-month forward rate - pic.twitter.com/uFsDKHRJmu

2.14am GMT

The Japanese prime minister Shinzo Abe is planning to meet the US president-elect in New York on 17 November, a Japanese government official has said.

1.54am GMT

The commodities market is looking slightly different to stocks today.

While equities are surging ahead, the price of oil has dropped amid concerns about the impact of Trump on global trade.

The outcome of the U.S. election adds to the challenges for the oil exporters because it will likely lead to weaker economic growth in an already fragile global economy. And that means additional pressure on oil demand.

1.31am GMT

Reuters reports that S&P, the ratings agency, has affirmed the country's investment-grade AA+/A-1+ sovereign rating on Wednesday while maintaining its stable outlook.

It welcomed calls for unity from all sides of US politics in the wake of Trump's win but "high general government debt and increased uncertainty" meant there it could not restore the coveted AAA rating it removed in 2011.

Given Mr Trump's lack of experience in public office, and his win as a political outsider without an established policy track record, there is a degree of uncertainty over policy formulation and execution. However, there is a difference between campaign rhetoric and concrete policy proposals and execution once in office. We await further information on the formation of a cabinet and policy proposals, particularly once the president-elect assumes office.

Alongside Mr. Trump's victory, the Senate remains in Republican hands, as does the House of Representatives. Hence, the president-elect and the Republicans have a mandate for and ability to effect policy change more easily than with a more divided government in recent years.

1.14am GMT

Trading has been underway for an hour now in Japan and Korea. Here's where the main indexes stand:

1.02am GMT

The Reserve Bank of New Zealand hasn't waited around to see what a Trump presidency might mean for US monetary policy - it cut its base rate 25 basis points to a record low of 1.75% this morning.

The move was expected and is the third cut this year. It's driven partly by a need to get the NZ dollar down to help the country's huge dairy industry.

We think at this stage that we won't need another cut. The economy is doing well and you certainly wouldn't want to create excessive volatility in respect of interest rates and output in the exchange rate by surprising the market with interest rate adjustments.

12.46am GMT

This is an interesting chart. Wednesday saw one of the biggest drops in volatility ever recorded as the markets quickly put their concerns behind them and went into risk-on mode.

Volatility Index has fallen 36% thus far this week, the 3rd largest 3-day decline in history (more than post-Brexit, now 5th on list) $VIX pic.twitter.com/tmbm2YyIek

12.40am GMT

But as with Australia, it's not clear where this is going. A Trump presidency promises a more aggressive US trading position which the markets have implicitly welcomed. But not everyone can be winners here, can they?

China is the obvious loser in Asia if, let's say, Trump tries to force Apple to make its iPhones in the US instead of Shenzhen and Shangahi.

Beijing would have two choices. It might take an emollient line, promising to increase direct investment into the US as a way of supporting Trump's attempt to rebuild the American economy.

More likely, though, China would adopt an aggressive, nationalistic stance. Beijing is not without economic weapons, since it has amassed a vast stock of US Treasury bonds in recent years, the proceeds of its trade surplus with America. Beijing could meet Trump's threat with one of its own: to dump US assets. A tit-for-tat trade war, in which China puts tariffs on US exports, could not be ruled out either.

Like many I had been concerned market participants would be worried about Trump's relationship with the Federal Reserve and a number of their key trade partners (such as China and Japan), but again this concern is for another time it seems.

12.23am GMT

The market in Japan has opened very strongly with the Nikkei rising more than 6%, reversing the huge losses of Wednesday.

The Kospi in Seoul is also up.

TOKYO'S NIKKEI SHARE AVERAGE EXTENDS GAINS, UP 6.00 PCT

#JAPAN: Nikkei 225 cruises past 17,000, closing in on 6 percent gains early session $NKY $USDJPY

12.13am GMT

The Aussie dollar has risen this morning from overnight lows of below US76c as the markets yo-yoed around during US election night.

The Aussie is trading at US76.50c this morning.

I think if Trump delivers on his campaign promises then we face a more volatile global economic and geopolitical environment in the years ahead ... For the Aussie that means it benefits from the reflationary aspects of Trumponomics, but could suffer from the rise in US bonds, and likely Fed hike in December if Australian interest rate markets don't go with those moves higher.

12.01am GMT

Huge lead from Australia this morning. The ASX/S&P200 is up nearly 3% and resource and financial stocks have led the way. The iron ore producer Fortescue is the top riser at well over 10.6% but Macquarie and BHP have also shown big gains.

My colleague Melissa Davey has just filed this report on the morning's surge.

The combination of huge gains in materials, fiscals and energy should push the ASX 200 3.4%, which if it closes at that level would be the strongest gain since 6 October 2011

Incredible gains this morning. Many were predicting further losses after Trump was elected. Will this last? #ASX200

There's a 'Trump turnaround' in 1st hour of trade on the Australian share market #ASX200 +3.0% to 5,311. $BHP +8.6% $BLS +12.0% @ABCNews24

11.37pm GMT

Hello and welcome to the markets live blog from Sydney.

Well, that didn't turn out quite how it was expected to - on a number of levels. The surprise of Trump's win looked like leading to market meltdown across the world. But it didn't, thanks in part it seems to Trump's conciliatory speech, proving that investors hate uncertainty more than anything. The promise of a smooth handover of power, a united Congress, tax cuts and a huge infrastructure spending boost was enough to turn red screens green.

The stunning turn in sentiment suggests there is now a consensus building that much of the policy announced during the campaign was a sales pitch rather than a commitment to act. Investors ignored the potential for damage to international trade and growth prospects and focussed on Republican control of both houses of Congress as well as the White House. This offers the prospect of reform that could stimulate the US economy. However, last night's action may be as good as it gets for markets for some time. Policy uncertainty and populist agendas rarely lead to sustainable economic growth.

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