Wall Street election reaction: stocks rally but experts warn of trouble ahead – as it happened

Rupert Neate (now), Graeme Wearden, Nick Fletcher

from on 2016-11-09 21:18 (#20WSD)

Wall Street reacted positively to the election of Donald Trump as the 45th US president, despite his victory sparking panic on global markets earlier in the day. But experts warned that the US, and global, economy faces a very uncertain future.

Donald Trump wins US election: the world reacts - live
The biggest corporate winners: prisons, oil and pharma
The dollar hits four-month high against the yen
Shares in gunmakers tumble
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9.18pm GMT

8.28pm GMT

The former chairman and CEO of General Electric said "the opportunities are unlimited" under a Trump presidency.

You look at lower taxes. You look at job creation. We are stuck. We have been stuck in a terrible, overregulated economy for eight years. I mean stuck. Business stinks.

Like Republican message on Economy, Security and Supreme Court...Unfortunately, wrong messenger...Party must change nominee now.

8.08pm GMT

The Guardian's economics editor Larry Elliott says Americans have gambled on Trump's promise that he can shift the the US out of its post-financial crisis torpor by cutting taxes and increasing spending even though they run the risk of higher inflation and a bigger budget deficit.

Although Trump campaigned as an outsider, his policies have been tried before. Ronald Reagan said his tax cuts and extra spending for the Pentagon would generate higher revenues and balance the budget. It didn't. Tax breaks for the rich and military Keynesianism sent the deficit rocketing.

For the time being, all Wall Street can see is higher growth and bigger corporate profits. That's why share prices have been going up.

7.54pm GMT

Trump will have to temper his global antagonism, economists say

Don't panic, too much says Berenberg bank's chief America's economist Mickey Levy in a note to clients:

Trump will learn quickly that international affairs are very complex and he will quickly come to rely on the various government agencies and experts that understand and influence the US' approaches on international affairs. This will serve to soften some of his brash statements during the campaign.

China and Mexico are two of the US's largest trading partners. Neither wants to enter a trade war with the US, and neither can afford to do so. The US relies heavily on imports from those partners. Current concerns about major trade barriers being erected are over stated and not realistic.

His proposals to raise trade tariffs - pledging, among other things, to levy a 45 per cent tax on Chinese imports - are a worry. His denouncement of China as a currency manipulator could also invite retaliation from the world's second biggest economy. At a time when global trade appears to be experiencing a structural decline, Trump's stance casts a shadow over the world's economic prospects.

7.45pm GMT

BofA Merrill Lynch downgrades US 2017 growth

The bank has cut its forecasts for US GDP growth by 0.5% percentage points in both the first and second quarter of 2017, and warned of "despair in the financial markets". It said:

7.27pm GMT

Trump's economic advisers have accused Janet Yellen, the chair of the Federal Reserve, of creating a "false economy" by keeping interest rates artificially low to help President Obama and his Democratic opponent Hillary Clinton.

Trump has attacked Yellen throughout his campaign. In September he said Yellen "should be ashamed of herself,". "I used to hope that the Fed was independent," he said in an interview with CNBC. "And the Fed is obviously not independent. It's obviously not even close to being independent."

He has made it a very strong point of his campaign that he thinks that the Federal Reserve's intervention and elongated accommodative monetary policy has created a false economy. People who have worked all their lives have been penalised by these low rates.

6.52pm GMT

Dominic Rushe, US business editor, has been speaking to Jack Ablin, chief investment officer of BNP Private Bank. Ablin was as surprised as many by Trump's victory and by the sanguine reaction of the US markets.

I expected that at the least the markets would give up all the gains that they had made when it looked like Clinton was going to win. That said it is encouraging that people are seeing opportunities," he said.

Trump has suggested building a wall around our borders and he's attitude on trade could build a figurative wall around US business."

6.38pm GMT

Mexico's richest man, telecoms magnate Carlos Slim, is not quite as rich today.

The world's 5th richest man, who is also a big donor to the Clinton Foundation and major New York Times shareholder, has lost $5.1bn in wake of Trump's victory according to Bloomberg.

6.18pm GMT

JPMorgan CEO Jamie Dimon has emailed all his employees, calling on business leaders and government officials to listen to the disenfranchised working class voters who helped deliver Trump the election. He said they showed a "deep desire for change".

Here is the full text of his memo (highlights, ours):

Dear colleagues,

We are going through a period of profound political and economic change around the world, and American citizens showed that deep desire for change in voting to elect Donald Trump as the 45th President of the United States. We have heard through democratic processes in both Europe and the United States the frustration that so many people have with the lack of economic opportunity and the challenges they face. We need to listen to those voices.

6.02pm GMT

This is Rupert Neate, in the Guardian's New York office, taking over from Graeme.

As Wall Street pulls off a surprising surge despite 370 prominent economists warning that a Trump presidency would be "dangerous, destructive" for the national and the world economy, let's take a look at who the biggest financial winners are.

The biggest corporate winners from Trump's victory. Private prisons and oil companies pic.twitter.com/xVjRgH1Ziz

Private prisons would likely be a clear winner under Trump, as his administration will likely rescind the DOJ's contract phase-out and ICE [Immigration and Customs Enforcement] capacity to house detainees will come under further stress.

5.12pm GMT

There's never much room for sentiment in the financial markets.

And over on Wall Street, the S&P 500 index had hit its highest level in a month - just as Hillary Clinton was giving her first speech since the election.

Trump breaks S&P500 2 month downtrend shocker. US index hits 4 week high: pic.twitter.com/XYIZa96Sam

Dow up 200, on the one thing America does better than any other country: transfers of power.@CNBC

4.57pm GMT

4.55pm GMT

After a wild day's trading, European stock markets have ended the day with solid gains.

In London, the FTSE 100 index of blue-chip shares closed 1% higher at 6911.8.

4.40pm GMT

Wall Street is betting that the prospect of reforming America's gun laws faded last night, sending shares of the US's two largest gun companies sliding by 10% today.

Sam Thielman reports:

Donald Trump's election effectively puts an end to the gun control legislation proposed by Democrats. Under Barack Obama, gun companies have enjoyed record breaking sales and share price growth driven by fears that he would tighten rules on sales following a series of mass shootings.

Smith & Wesson's shares were down 10.21% and shares of Sturm Ruger were down 12.29% in early morning trading.

4.32pm GMT

US stocks are moving higher, pushing the Dow Jones industrial average up by 100 points, or 0.5%.

So much for the Trump slump....

The narrative seems to be that Trump's presidential promises during his victory speech have reassured investors, allowing for the remarkable recovery seen this afternoon. The market may also be correcting the intensely negative gut reaction it had to the result, much as it did in the aftermath of the Brexit.

Simply it is too early to tell what exactly President Trump has in store, something that may make for a rocky rest of November, even if today has confounded expectations market-wise.

4.05pm GMT

The US dollar has now risen since Wall Street opened, reversing its overnight losses.

Some analysts are arguing that Trump's victory doesn't rule out a hike in US interest rates in December.

Dollar Surges Most Since Brexit After Trump Election Surprise https://t.co/Ucq2pJvzQw via @markets w/ @worrachate pic.twitter.com/2BaBBEwWRj

4.00pm GMT

Capital Economics also predict that Trump might be less extreme than anticipated:

Capital Economics: market response to Trump is muted cos investors believe he won't be that radical once in office pic.twitter.com/Wq8yE5gf2y

3.42pm GMT

David Kelly, chief global strategist at JPMorgan Asset Management, has predicted that Donald Trump could be less aggressive and more pragmatic than he promised during the campaign

He told investors on a conference call that:

"The hallmark of a Donald Trump presidency will be a certain amount of pragmatism."

"The danger of triggering a recession right at the beginning of your presidency is pretty high."

3.39pm GMT

A couple of photos from Wall Street:

3.32pm GMT

Credit rating agency Fitch has warned that Donald Trump's plan to cut taxes would be "negative" for America's creditworthiness in the medium-term.

In a new report, they say:

Tax cuts would increase household disposable income, which could boost short-term growth when coupled with deregulation and higher public investment.

But this would depend on how far such measures are offset by potential negative factors such as a hit to private investment from policy uncertainty, financial market developments (for example a rising dollar and falling equities), and adverse trade effects.

3.31pm GMT

Shares in Smith & Wesson, the firearms maker, have tumbled by 10% today:

Trump's #ElectionHangover is bad news for gun manufacturers. No Hillary to scare customers into buying new ones now... pic.twitter.com/yv03vYpc6t

3.28pm GMT

It looks like Trump's victory is is good news for someone: private prisons.

#privateprisons stocks spike after Trump victory. A sign of things to come. pic.twitter.com/IFrTO90XIf

3.17pm GMT

After 45 minutes of trading, Wall Street remains remarkably calm. Here's the situation:

3.13pm GMT

Healthcare firms are plunging this morning as Wall Street investors anticipate big changes to Obamacare.

Insurance group Centene Corporation is down 16%, the worst-performing stock on the S&P 500.

"They have a death blow to the Obamacare health coverage expansion,"

2.54pm GMT

Pharmaceutical firms are also propping up the S&P 500, which is down just 0.4% in early trading.

If I told you Trump would win and the S&P would open unchanged... What would you have told me?

Stocks recovering, oil up, USTs down, copper up about 3%. Markets going for the "infra spend/reflation" story.

2.52pm GMT

Drugs firm Pfizer has leapt by 9.8%, with rival Merck not far behind (+6%)

And machinery maker Caterpillar has jumped by 8%, as investors anticipate Trump's new infrastructure plan.

2.48pm GMT

Shares in biotech companies are rocketing.

*NASDAQ BIOTECH INDEX POSTS BIGGEST INTRADAY GAIN IN EIGHT YEARS

2.39pm GMT

Ding Ding! Wall Street is open for trading....

And the Dow Jones index actually ROSE by 70 points, before dipping back.

USA equity markets roaring back pre-market , Dow Jones + 700 points from lows

2.24pm GMT

The future direction of global stock markets depends on how Donald Trump now behaves.

A lot depends on what happens in the next few days, and what Mr Trump signals.

2.06pm GMT

Time for another quick recap, before Wall Street opens at 9.30am Eastern time (2.30pm GMT)

2.00pm GMT

Here's our economics editor Larry Elliott on how Donald Trump's victory is the latest revolt against globalisation....and how French far-right politician Marine Le Pen could be the next beneficiary:

1.57pm GMT

Until last night's shock results came in, Wall Street was quite confident that the US Federal Reserve would raise interest rates in December.

But today, PNC's chief economist Stuart Hoffman is betting the Fed will hold off on a rate rise now. There's going to be too much uncertainty in the wake of Trump's victory.

"There are many open questions about Trump's economic policies, but they are likely to be very different from the basic bipartisan consensus that was guided U.S. policy since World War II. Trump has been very skeptical of U.S. trade pacts, and has called for severe restrictions on immigration. He also called for large cuts in personal income tax rates for wealthy Americans, a large infrastructure program, a reduction in regulations, and the repeal of the Affordable Care Act.

"With much greater economic uncertainty likely in the months ahead, the Federal Open Market Committee could decide to hold off on an increase in the fed funds rate; PNC had been expecting the FOMC to raise the rate at its December 13-14 meeting, but that looks much less likely now.

Market Implied Probability for a December Rate Hike Staying Above 70%: pic.twitter.com/n1lBldbLUS

Whiplash in market-implied (OIS) odds of a December hike: pic.twitter.com/4Yobqwjxbz

1.42pm GMT

After a dramatic night, and probably too little sleep, US traders are returning to Wall Street to face a new world.

The New York stock market is expected to fall when trading begins in an hour's time. But fears of a market crash have receded.

Equity markets are generally lower, however, losses are not of such a magnitude that they suggest market panic, in contrast, the markets appear to be sanguine about a Trump Presidency, which dramatically increases global economic uncertainty.

Perhaps Trump's conciliatory tone in his victory speech has eased concerns about his Presidency, or perhaps markets have no idea how to price in his victory as we have no precedent for someone like Trump. Either way, a mere 24 hours ago no one would have predicted such a calm market reaction on the back of this result.

1.28pm GMT

This chart shows the stunning move in US Treasury bills (American government debt) overnight:

Incredible 3 day chart of 10-year yields https://t.co/93dZjFSegL pic.twitter.com/057A3MYsOT

1.19pm GMT

Defence company shares are continuing to rally, sending BAE Systems up to a new record high.

That's a sign that investors are expecting governments to spend more on weaponry such as military jets and armoured vehicles, now Trump is heading to the White House.

If Europe can no longer count on American military support to contain simmering problems on the Russian borderlands and in the Middle East, it will have to increase its own spending. Or in a more benign scenario, Mr. Trump succeeds where others have failed, by holding more NATO members to commitments to spend 2% of output on defence.

BAE Systems, one of the biggest weapons manufacturers in the world, has seen its shares hit a record high today on that Trump victory pic.twitter.com/WlV6kY1Gfm

1.03pm GMT

Bloomberg's markets dashboard shows how Donald Trump's victory has moved the markets.

Trump damage in one chart. pic.twitter.com/vgR57fprCB

12.55pm GMT

There was an early rush into gold today, as panicky investors looked for a safe place for their money.

"If Trump proves to be the belligerent, high-spending protectionist that America just voted for, the underlying move in world gold prices looks set to keep rising."

12.42pm GMT

Government bond prices have dropped today, pushing up the yield (interest rate) on longer-term debts issued by the US and UK governments.

It's not a major selloff, but it indicates that the markets are anticipating a surge of borrowing under Trump (to fund that infrastructure plan) and higher inflation too.

"The main implications of this election are likely to be higher inflation as a result of fiscal policies such as tax cuts and infrastructure spending. In the medium term this will raise US and global interest rates, but there may be a short term hit to consumer and business confidence.

However, a comparison with Brexit would suggest that this could be overstated.

Medium term, Trump will be reflationary, with tax reform likely to encourage corporates to repatriate cash held overseas, infrastructure spending and no great concern about higher deficits short term.

Against a background of pretty full employment and wage growth of 2.8%, announced last week, this should spell higher interest rates and bond yields over time.

12.29pm GMT

The lessons of the Brexit vote were not learned, says Craig Erlam, senior market analyst at foreign exchange specialist Oanda:

Markets have pared their earlier moves following the substantial knee jerk reaction to Trump securing an unlikely victory over rival Hillary Clinton.

While the result was unexpected, the reaction in the markets stems once again from them being poorly positioned heading into the vote, overconfident that Clinton would ease to victory despite only having a narrow lead in the polls and being embroiled in an FBI investigation days before. The greatest oversight was the significance of the anti-establishment feeling in the US, similar to that which prompted the UK to quit the EU in June. It's clear no lessons were learned from the Brexit vote on June 23...

12.21pm GMT

Trump's victory could herald the end both of globalization and the liberal economic consensus that has reigned in Western governments for decades, says Christopher Mahon, Director of Asset Allocation Research at Barings

In achieving victory, Trump has defied the political class, pundits and markets alike. Rightly or wrongly, his chosen narrative has been simple - globalization is the cause, inequality is the effect.

It is a theme that we saw first in the riots and referendums in Greece, which then found firmer footing in Brexit, and has now reached its climax in America.

His most well-known campaign rhetoric involves building a wall between the U.S. and Mexico, increasing deportations and tearing up NAFTA. Outside of North America, a tougher stance on China via the introduction of tariffs and duties could significantly impact emerging markets. Trade deals with the EU and Japan may also be at risk.

12.03pm GMT

European stock markets are dipping deeper into the red, although they're still someway off their opening lows.

Italy's FTSE MIB is one of the worst performers, down almost 2.4%. Trump's victory is fuelling predictions that the Italian public could reject constitutional reforms in a referendum scheduled for early December.

Mid-day review: Equities still flashing red in Europe as they digest the #Trump victory. pic.twitter.com/jmc9HuDItk

11.54am GMT

There's no escape from the shadow of Brexit today.

Over in Brussels, the EC has predicted that UK growth will almost halve next year, to just 1%, due to uncertainty over Britain's exit from the European Union.

Euro commission's GDP forecast for UK:

2016 1.9%
2017 1%
2018 1.2%

'Uncertainty is likely to remain high as Brexit negotiations continue'

Taking back control: EU nearly halves British growth outlook for 2017 because of Brexit - AFP

11.47am GMT

Derry Pickford, co-head of asset allocation at City firm Ashburton Investments, predicts that Donald Trump will face big clashes with Congress, even though the Republicans will control both the lower house and the Senate.

He says:

Given that Trump will nominate the vacant seat on the Supreme Court, this should give the Republicans a huge amount of policy freedom.

Trump is likely to face resistance from his own party and is unlikely to get cooperation from the Democrats after a bitter and acrimonious election.

There is an Italian referendum on constitutional change, a French Presidential election and a Federal election in Germany scheduled within the next 12 months.

An anti-establishment vote, despite what opinion polls say beforehand, should not surprise markets although we believe such victories are still likely to create market volatility given the uncertainty it will create for the policy environment.

11.33am GMT

Here's a thought:

Has anyone actually talked about the huge conflict of interest in Trump being President and his policies impacting his company's profits?

11.31am GMT

We're still expecting Wall Street to take a dive when trading begins in three hours.

The Dow Jones industrial average is expected to drop by over 374 points, or around 2%.

Dow futures down 300 points, but they had plunged roughly 800 points earlier Wed. $DJIA #Elections2016 https://t.co/D7BWKZivLS pic.twitter.com/kOxTjBQagC

11.20am GMT

Donald Trump's victory is boosting shares in three sectors - mining companies, pharmaceuticals groups, and defence firms.

So in London, drugs makers Hikma and Shire are both up by over 7%. That's because Trump isn't likely to deliver on Hillary Clinton's pledge to rein in medical prices.

10.58am GMT

Sir Martin Sorrell, the founder and CEO of advertising giant WPP, tells us that the Trump election is "effectively a second Brexit that leaves many very surprised, including the markets and me".

Sorrell says:

It's going to take a significant amount of time to assess the implications beyond the short term.

Increased levels of uncertainty will mean more hesitation to make important decisions in the short term, both by people and governments. But it may accelerate implementation of helpful reforms in the medium term to reduce uncertainty and stimulate investment as a result.

WPP chief Sir Martin Sorrell says Trump victory is like a "second Brexit" that will increase economic uncertainty

Sorrell adds that he has become a father again on election day with "baby Sorrell" born in New York. Pollsters get that one?

10.49am GMT

More on the recovery in European markets after the initial shock. Mike van Dulken, head of research at Accendo Markets, said:

Equity markets are negative, but nowhere near as much as you might expect, as investors digest news of a Trump Presidency. A FTSE 100 close to break even, having rallied 300 points from its overnight lows, and a DAX and DOW nursing what can only be described as minor losses in comparison to all those apocalyptic forecasts, looks a decent outcome.

If anything, what's happened bears eerily similar hallmarks to Brexit; complacency, surprise and panic followed by swift recovery. If anything it's happened more quickly this time. Could Trump prove less controversial now all those populist votes have been won? Are there enough positives including an absence of congressional deadlock to help markets back towards their highs?

10.18am GMT

Time for another recap, after a wild day in the markets (and it's not even lunchtime in the City yet!).

World financial markets have swung wildly today after Donald Trump stunned the world and beat Hillary Clinton to the White House.

'Initial stock market reaction to the Trump victory was a short intake of breath, followed by a shrug.

The relationship between the Mexico and the United States is in danger of deteriorating with Mr. Trump promising pre-election to renegotiate terms of trade and attempt to curb immigration from the southern border."

9.56am GMT

It didn't do Hillary Clinton much good, but the US economy is actually in pretty decent shape, with unemployment still low and growth rising in the last quarter.

That's another reason that the markets aren't having a complete meltdown today.

Real economic growth has picked up in recent months while the unemployment rate, at 4.9%, is close to any economist's definition of full employment. S&P500 earnings have rebounded smartly from the oil & dollar induced slump of 2015 and inflation is still moderate.

Moreover, the global economy is also showing signs of life with the global manufacturing PMI index hitting a two year high in October. All of this, absent political uncertainty, would be positive for stocks and negative for bonds.

It should be noted that there is a wide gulf between Mr. Trump's agenda and that of many "establishment" Republicans and the latter may well balk at unfunded tax cuts or spending increases. In addition, both the new President and Congress will likely act more slowly on dismantling the Affordable Care Act or trade agreements, until some better alternatives can be found.

9.45am GMT

Trump's pledge to spend billions of dollars on new infrastructure is helping to calm the markets, says Duncan Weldon of the Resolution Group:

Market reaction: calmer than a few hours ago. And pointing to taking the infra stuff seriously/reflation.

9.36am GMT

A few hours ago, traders feared that the US election would create a Brexit-style slump in the markets - as Asian shares suffered an almighty tonking.

So far, that isn't happening, but there's still a definite move out of risky assets as investors wonder what on earth happens next. The Mexican peso continues to bear the brunt of it, hitting record lows against the dollar today.

"With Donald Trump winning the US election a broad global risk off move is developing, although we've not seen the kind of panic that followed the EU referendum, except in isolated instances such as the Mexico Peso

Safe havens are well bid, especially the Japanese Yen alongside fixed income and gold.

9.33am GMT

If you're just tuning in, here's the election result that has shocked the world:

9.20am GMT

City investors might be coming to terms with a Trump presidency, but many commentators are extremely alarmed about the implications of the Republican's victory.

Our colleague Jonathan Freedland has already delivered a devastating critique of the situation:

We thought the United States would step back from the abyss. We believed, and the polls led us to feel sure, that Americans would not, in the end, hand the most powerful office on earth to an unstable bigot, sexual predator and compulsive liar.

People all around the world had watched and waited, through the consecutive horrors of the 2016 election campaign, believing the Trump nightmare would eventually pass. But today the United States - the country that had, from its birth, seen itself as a beacon that would inspire the world, a society that praised itself as "the last best hope of earth", the nation that had seemed to be bending the arc of history towards justice, as Barack Obama so memorably put it on this same morning eight years ago - has stepped into the abyss.

9.20am GMT

European markets continue to regain ground after sharp losses at the open. The FTSE 100 is almost flat, while Dax and CAC are down just 0.8%

9.12am GMT

Crumbs... the FTSE 100 just erased all its early losses, and was briefly UP 2 points.

#FTSE100 flirts with a breakeven recovery. Brexit: Part deux

9.00am GMT

Here's a clip of Donald Trump's victory speech:

"It's a movement comprised of Americans of all races, religions, backgrounds and beliefs." @realDonaldTrump delivers his victory speech pic.twitter.com/niXLQVKXMl

9.00am GMT

The first speech by President elect Trump has had a calming effect on the markets, says Kathleen Brooks of City Index.

She reckons that Trump "definitely sounded more Presidential than he has done at any stage during the election campaign" (not a Herculean task, to be honest)

In fact, one could argue that this outsider has delivered an establishment-style victory speech, which is soothing stressed markets.

Could the markets be hoping that 1, Trump won't be as bad a President as they thought he would be less than 24 hours ago? 2, That he may actually be more establishment and less maverick than he portrayed himself throughout the campaign? At this stage we can't answer these questions, but they give the markets lots to ponder today.

8.56am GMT

The yield, or interest rate, on US government debt is rising this morning after an overnight slide.

That means two things.

US yields bounce back as Trump bigs up infrastructure spend #USElections pic.twitter.com/40vKBCTglB

8.55am GMT

Trump's victory may not be the end of this upheaval in global politics, says Jim Leaviss, head of retail fixed interest at M&G Investments:

The big implication for investors of what happened last night is this: with no income growth for most populations in developed world economies since the Great Financial Crisis (with the exception of the 1%), the established parties and candidates are being heavily punished in elections.

It doesn't stop here - we have a referendum on the Italian constitution next month, and many more European elections in 2017 (could Marine Le Pen be elected President in France?). I saw a statistic this morning where across the G7, 65% of parents believe their children will be worse off than they are. Having seen the electoral shifts in the UK with Brexit and now the US, do established political parties react by promising significant fiscal expansions? Could last night's vote trigger the end of global austerity?

8.46am GMT

If over the weekend someone had said Trump will win, who would have predicted the FTSE100 would be 100 points higher than Friday's close?

8.46am GMT

Alex Edwards, currency analyst at UKForex, reports that the US dollar is recovering from its overnight slide, following Trump's acceptance speech:

Edwards says:

His appeasing tone has definitely helped. It wasn't quite the reaction we were expecting, although European equity markets are all taking a hit early in trading.

"Investors and traders are still trying to get their heads around the official result, and there's a lot of trepidation out there. Spreads are wide and we still expect to see some big moves in the currency markets as the day goes on."

"Sterling loses its Trump hump" says @World_First pic.twitter.com/JRClya0oR2

8.38am GMT

Trump's victory speech isn't enough to prevent some European markets suffering their biggest selloff since the Brexit shock:

Europe's shares fall by most since aftermath of Brexit vote following #Trump's win https://t.co/vrbc81o0qR pic.twitter.com/MCry6DyrHG

8.33am GMT

Volatility is absolutely rampant this morning as investors try to get to grips with Trump's sensational victory.

As this chart shows, the FTSE 100 slumped by 140 points (2%) at the open, before romping back during Donald Trump's victory speech.

#Germany's Dax trims losses after first Trump shock. Now down only 1.7%. pic.twitter.com/9EIWfT34Vq

8.24am GMT

There are three key areas the markets will be looking at in the wake of Donald Trump's victory, says George Saravelos of Deutsche Bank:

Trump rhetoric. Does the potential president-elect sound "presidential"? Are there signs of moderation in policy, particularly its most controversial aspects on foreign policy? How quickly do we find out about presidential appointments, to the post of Treasury secretary in particular, and are they credible?

Data. There is an unambiguous rise in policy uncertainty and the key question is how much does this impact near-term US and global growth. Both the Fed and the markets will be closely scrutinizing upcoming releases, but we will have to wait until the week of November 21st for the first business confidence surveys (Markit PMI).

Chair Yellen. It is reasonable to assume that the Fed may put December rate hike preparations on hold until more clarity is reached on the data, but even more importantly the market will be looking for confirmation that Chair Yellen will not resign. Trump has been particularly critical of her term so policy continuity will be particularly important.

There is a clear tension between the negative impact of lower Fed expectations, higher uncertainty and risk premium on US assets compared to the positive implications of Trump's fiscal and corporate tax programs on growth and corporate tax repatriation. We view the impact as unambiguously negative for emerging market currencies against the dollar. Risk-aversion near-term but prospects of higher US yields medium-term both work against EM. The big rise in EM inflows over recent months paints a worrying backdrop. For developed market currencies the tension between lower Fed expectations near-term but a more positive fiscal story medium-term is balanced enough to keep our forecasts and medium-term dollar bullish outlook unchanged. The one exception to our dollar positive forecasts is dollar/yen where we view both the Asian geopolitical and risk-aversion impact as sufficiently strong to re-enforce our conviction on our year-end target of 94.

8.18am GMT

Donald Trump's victory speech has helped sentiment in the City.

His pledge to serve all the American people, rebuild the nation's infrastructure, double the growth rate and "do a great job" have all brought some calm to the markets after a very volatile night.

"It's because he sounded more presidential, there was no mention of 'lock her up" or 'build a wall'. It was all, dare I say it, presidential",

Trump's speech has helped contain the FTSE 100's fall, down around 1% after being indicated to be 3% down

8.11am GMT

Shares in two precious metals producers, Fresnillo and Rangold, are soaring - propping up the FTSE 100.

8.06am GMT

Pharmaceutical shares however are on the rise in the FTSE 100, with Shire, Hikma, GlaxoSmithkline and AstraZeneca all up between 2% and nearly 5%.

The sector has always been perceived as a defensive one in times of uncertainty - and this certainly counts - but more significantly, they may not face the price cuts which Hillary Clinton had promised to implement if she won.

8.03am GMT

And we're off! The London stock market has tumbled by almost 2% at the start of trading, in a heavy selloff.

But it's not a Brexit-style rout, or a Black Monday-ish crash.

7.59am GMT

7.55am GMT

City investors are gathering around screens to watch Donald Trump give his victory speech, as they prepare for a messy start to trading.

Trump is promising to be the president for 'all Americans', and to reach out to those who didn't support him. He's also vowing to use his business experience to help the US, and pledging a major new infrastructure spending plan to boost the economy.

Dollar strengthening against major currencies as Trump speaks says @World_First on his conciliatory tone

Trump keeping to the autocue in this speech. He realises how important this moment is

7.49am GMT

Saker Nusseibeh, chief executive at Hermes Investment Management, says a Trump presidency will probably be bad for America's long-term growth prospects.

He writes that Trump's foreign policy agenda is a particular risk:

Trump might create market volatility through his pronouncements in the field of foreign policy, traditionally a preserve for presidential authority. The assumption is that Trump will listen to advice from professionals in the US State Department when dealing with foreign affairs, but on the campaign trail he demonstrated a clear willingness to dismiss professional advice, to the delight of his support base.

Once again it is not a stretch to imagine Trump in talking to his home constituency might alienate the traditionally supportive Gulf nations with his Islamophobic comments. This might then strengthen Iran's influence in the region, which could threaten regional stability and therefore the oil price. Likewise, Trump's anti-NATO and pro-Vladimir Putin comments could be taken, if repeated when he is in power, as a green light by the Russian President to intensify his revanchist foreign policy in Eastern Europe. This in turn could lead to rising risk premia for European assets.

7.39am GMT

Associated Press have called the election for Donald Trump.

Here is it: Trump elected 45th US president #ElectionNight pic.twitter.com/Zp7YoS1Cqp

Donald Trump shattered expectations on Tuesday with an election night victory that revealed deep anti-establishment anger among American voters and set the world on a journey into the political unknown.

The Republican nominee has achieved one of the most improbable political victories in modern US history, despite a series of controversies that would easily have destroyed other candidacies, extreme policies that have drawn criticism from both sides of the aisle, a record of racist and sexist behaviour, and a lack of conventional political experience.

7.32am GMT

People should try to stay calm, argues Aberdeen's Richard Dunbar.

"Now is the time for cool heads" - Aberdeen Asset Management senior investment strategist Richard Dunbar

7.26am GMT

Dominic Rossi, Global CIO Equities at Fidelity International, has given a very sobering assessment of the situation:

"We are heading into a world of unprecedented political risk which calls into question the pillars of the post WWII settlement. It's unsurprising investors are heading for cover.

"The immediate sense of bewilderment at the shift rightwards in American politics will need to give way to a more sober risk assessment.

"We are heading into a world of unprecedented political risk" says Fidelity's Dominic Rossi "unsurprising investors are heading for cover"

7.17am GMT

A Trump victory could force central banks to end their current policy of ultra-loose monetary policy, says Derek Halpenny, European Head of Global Markets Research at MUFG.

Halpenny says they may conclude that buying government debt with new money (quantitative easing, or QE) has reached the end of the road:

"This will no doubt be cited as another example of Brexit - disaffected voters who feel their voice is not being heard and when the dust settles, Central Bankers will in all likelihood conclude that QE and policies that slowdown government reform are part of the problem.

This victory certainly will at some point start to put upward pressure on long-term yields.

7.11am GMT

The latest word from America is that Hillary Clinton has not conceded defeat.

Campaign chairman John Podesta has just told supporters to go home and get some sleep, while the counting continues.

John Podesta, Clinton campaign chair, speaking now: "They're still counting votes!" https://t.co/RzbUkd3eXs #ElectionNight

7.08am GMT

7.04am GMT

Alex Edwards, currency analyst at UKForex, fears an 'extremely volatile day', as markets digest the shock US election results:

If Trump is announced president, we expect to see the dollar tank. Markets are still in denial here, but we're likely to see some very heavy dollar selling later today, through London and New York sessions.

7.00am GMT

The markets reckon it's all over, reports Jill Treanor from World First's offices in London:

Trump's win in Pennsylvania, says @World_First, hasn't moved markets.. Trump victory now "priced in"

6.54am GMT

Capital Economics fears that a Trump administration will quickly undermine relations with China and Mexico.

Paul Ashworth, their chief US Economist, says that the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership (between the US and the EU) are 'dead':

On trade, we expect Trump to start by labelling China a currency manipulator and to bring a number of perceived disputes to the WTO. Tariffs are possible further down the line, but won't be the first option. He will also insist on renegotiating NAFTA, but it is hard to know what he hopes to achieve.

Given the adverse market reaction we have already seen, the Fed's planned December rate hike is now off the table. There is a possibility that Fed Chair Janet Yellen and even some other Fed Governors (Lael Brainard??) will resign immediately. Although Trump can't sack Yellen before her term ends in February 2018, his win demonstrates that many Americans share his view that she has been overtly political. Under those circumstances, she may feel duty-bound to step aside.

Jesus Christ, we have to think about who Donald Trump is going to appoint to run the Federal Reserve.

6.50am GMT

Donald Trump could be just six (!) electoral college votes away from the Oval Office, with Associated Press declaring that he's won Pennsylvania.

Our main US election liveblog has the details:

6.39am GMT

The main European stock markets are tipped to plunge by over 4%, mirroring the impending slump in London.

The 2% surge in the euro today will hurt manufacturing firms, adding to general alarm over the US election results:

Our European opening calls:$FTSE 6599 -3.57%
$DAX 10059 -4.04%
$CAC 4290 -4.18%$IBEX 8522 -4.64%$MIB 16069 -4.45%

Whilst it may be only a few hours before we hear confirmation of what we now suspect in terms of this result, it is likely to be longer still before we get more clarity on the policy intentions of Donald Trump.

Aggressive protectionism is probably the greatest threat to US and global growth and financial markets, and more expansionary fiscal policy the greatest opportunity for stronger growth. Exactly what mix of these two opposing policy stances will follow may not be fully clear for months. In the meantime, the Federal Reserve is likely to view the market jitters with dismay - equivalent to a financial market tightening. And the case for a December rate hike from the Fed has diminished substantially.

How does Theresa May's government deal with a Trump administration? Number 10, privately, admit they don't know him or his people

6.29am GMT

European stock markets are heading for some very large falls when trading begins in two hours time, in a repeat of the June Brexit meltdown.

"It's looking like it's President Trump. This is a complete and utter shock to investors around the world and we will see European stocks sharply lower when trading opens in a few hours.

We currently expect the FTSE to open 270 points lower which is a collapse of close to 4%. We have seen a major flight to safety on a similar level to the Brexit vote and the Mexican Peso has collapsed against the pound as people around the world digest the realisation that Trump is extremely likely to now become President of the United States."

#Nikkei briefly plunged more than 6%, US markets predicted to open down 4%, #FTSE100 expected to open down 4% pic.twitter.com/T8HBeFVlfi

6.28am GMT

The Mexican Peso is ploughing fresh record lows against the US dollar and the euro, on fears that a Trump presidency will hurt the Mexican economy hard.

Today's 13% plunge has pushed the peso below 20 to the $1, in a wave of panic selling.

"There's a lot of panic in the market, it is definitely an outcome it was not expecting

"The movements are very strong, the market is showing higher risk aversion in search of safe-haven assets."

Mexican peso pain... Euro-Mexican Peso +15%...record high . $/MXN also at record high #USElection2016 market reaction. pic.twitter.com/qPaQq1NE6E

6.27am GMT

Asia Pacific has set the tone for what promises to be a dramatic day on the rest of the world's financial markets. A Trump presidency seems likely to bring a level of uncertainty not seen since the collapse of Lehman Brothers in 2008.

But as I sign off in Sydney and handover to London, here are the main points so far:

6.18am GMT

Geoffrey Yu, Head of the UK Investment Office at UBS Wealth Management, fears that a Trump victory could herald more shock results in 2017, when France and Germany head to the polls.

He's also concerned about Janet Yellen's future under a Trump presidency:

"Lightning appears to have struck twice as Trump is set for an unexpected victory, following the shock Brexit vote earlier in the year. Pollsters, pundits and markets probably need to take stock, figure out how they got 2016 so wrong and what this portends for 2017 as the electoral calendar is also quite crowded.....

"After the dust settles, policy and appointments will matter the most. For markets, what happens to Fed Chair Janet Yellen will be crucial. The impact of her future will be felt globally."

6.12am GMT

Japan's Nikkei has closed for the day (and what a day!), down 5.36% at 16,251 points.

That's a slump of around 919 points.

6.07am GMT

Our Australian economics commentator Stephen Koukoulas has had his say about a likely Trump win.

This is the worrying point in a nutshell:

"Make America Great Again", the slogan from the Trump campaign, involves the US raising barriers to international trade in an effort to protect US industry. If Trump follows through and works to restrict trade, especially with China where the US runs a huge trade deficit, there is a genuine threat that the global economy will stall, perhaps falling back into recession.

6.05am GMT

The euro has surged by over 2% against the US dollar, jumping to $1.126.

If Trump is in the White House, the European single currency could become a popular safe haven with nervous investors.

6.05am GMT

The Tokyo market is closing in a few minutes and is still down more than 5%.

A Trump win is shaping to be a huge shock there. Our reporter in tokyo, Justin McCurry, is about to file his analysis of what it means to the region.

A Donald Trump presidency could pose the biggest threat to Washington's security ties to its two biggest allies in the Asia-Pacific - Japan and South Korea - since the end of the second world war.

6.00am GMT

The US dollar has now slumped by 1% against the British pound, sending sterling up to $1.25.

That's nearly a one-month high, but still a long way below the pre-Brexit vote levels (when the pound was worth around $1.48)

While @World_First waits for results , here's the pound v dollar pic.twitter.com/ofSbGf9JWF

5.56am GMT

Correction - the ASX/S&P200 in Australia has not hit its lowest point since April. It's just the lowest since Brexit in June. Apologies.

Either way we could be looking at more rate cuts in Australia, according to CommSec chief economist Craig James, where the Aussie dollar has fallen by 1.78% to US76.12c.

Before today, financial markets has only priced in a one in three chance of a rate cut in Australia by mid-2017. If financial market volatility continues and ends up affecting the broader economy, then we can't rule out a near-term rate cut by the Reserve Bank.

While sharemarkets through Asia have slumped today, a fall in the oil price, higher gold price and weaker Aussie dollar actually have served to benefit sections of the sharemarket and Corporate Australia more generally. Gold bugs would be happy with the higher gold price as would gold producers, with the latter benefitting from a weaker Aussie dollar.

5.47am GMT

Many analysts are warning that a Donald Trump victory could be bad news for Janet Yellen, the first woman to run America's central bank, the Federal Reserve.

A man who became known for his TV catchphrase, "You're fired!", Trump's plan to fire Janet Yellen from her position will not be popular with the markets

5.37am GMT

It's been a rough day for the ASX/S&P200 index in Australia which has fallen 101.2 points, or 1.92%, to 5,156.6 points. That's the lowest point since April.

ASX 200 value traded $9.59 billion, third biggest day of the year and +70% above the 30-day average. 92% of stocks lower

Thanks America. Just... thanks.... #ASX200 pic.twitter.com/o9sL7lPte1

#ASX200 is not down as much as it should be because a #Trump win = high rates. Aus debt bubble can't handle that.

5.27am GMT

Kit Juckes, currency expert at French Bank Societe Generale, says Trump has shocked investors around the globe:

Donald Trump is winning electoral college votes in key marginal states (Florida, Ohio, North Carolina) and while there is still a steep climb ahead for him to win the Presidency, he's doing a good impression of a cyclist overtaking all his opponents on an alpine stage of the Tour de France. Will he get the polka dot jersey and paint the electoral map red? Markets think so and are responding with the simplest 'risk off' reaction imaginable.

Gold and the yen are up. Treasury yields, equities, the Canadian dollar and Mexican peso are down. The Mexican peso has maintained its status as the bellwether of sentiment and is moving particularly sharply.

5.18am GMT

The financial markets are now indicating that Wall Street could suffer its biggest ever plunge (in points terms) when Wednesday's trading session begins.

The Dow is predicted to shed 800 points - a bigger points fall than in September 2008 when the financial crisis struck.

Biggest ever daily Dow Jones fall on record is 777.68 in 2008. Futures showing 833 at the moment.

"And now, let's give a warm Wall Street welcome to the new President!" Stock futures -5%.

5.11am GMT

Japan's Nikkei has now plunged by over 900 points, or 5.3%, as a wave of selling hits the Asian stock markets.

This is the exact same thing that happened during the EU referendum vote, when investors sided substantially towards pricing in a remain outcome and they were left in complete shock earlier in trading as a result of Donald Trump gaining momentum.

5.09am GMT

The Dow and S&P have hit their "limit down" on the futures market of 5% - ie they can't go any further into the red.

Another S&P futures update: pic.twitter.com/UfxhkQBqwl

Futures
S&P: -5%
FTSE: -5%
DAX: -5%
Nikkei: -5.5%
Crude: -4%
Peso/USD: -12%
Dollar Index: -2%
Gold: +4%
30-Yr Treasury: +1%
Goodnight

4.57am GMT

For more on what a Trump win could mean for the US economy - a recession for example - look no further than this piece from the Guardian's Suzanne McGee:

4.53am GMT

A Trump victory would bring on a rapid reassessment of Federal Reserve policy. Trump launched a strong attack on Janet Yellen's stewardship of the Fed during the debate back in September.

He said that thanks to the Fed's prolonged policy of low rates "when they raise interest rates, you're going to see some very bad things happen, because they're not doing their job". By that he implied that the Fed had allowed rates to stay too low, too long meaning that asset prices inflated by cheap money could deflate quickly when rates eventually rise.

Now the #Fed has just the excuse its been waiting for to blame its failure to raise interest rates in Dec. on!

The #Fed is much less likely to raise rates in December now. #ElectionNight https://t.co/TEroap7KgM

The election results so far are having a major impact on the interest rate markets. Market expectations for a rate hike from the Federal Reserve have tumbled to 50%; earlier on Tuesday expectations were more than 80%. The Fed is unlikely to hike interest rates if we see a sharp and prolonged decline in the stock markets, on the back of a surprise Trump win.

4.41am GMT

Back to the stock markets where it's looking very bloody in the usual parlance.

If #markets moves persist or go further, there will be some painful forced selling tomorrow - starting with #Mexico where #Peso is down 11%.

4.24am GMT

More from Jill Treanor on the trading floor in London on why markets are reacting this way.

She writes:

The great unknown is the economic policy, based around a trade war with Mexico, it's third largest trading partner, and China, it's biggest trading partner. Brexit was about UK instability. Trump is about global instability.

Markets are taking the Trump surge on the chin. Risk assets are being heavily sold across the board, with key barometers such as US dollar-Yen and gold reflecting investor sentiment, while the Mexican peso undergoes its own dark night of the soul. It seems remarkable that we are watching this unfold, just a few short months after Brexit. Once again the cat has been set amongst the pigeons. Clinton's path to the White House, so assured just a few hours ago, now looks to be a dead end. 2016 has been a year of upsets, but none will be as big as a Trump victory. Markets are rapidly reassessing whether a December rate hike, also a distinct possibility until this morning, is now off the cards.

4.21am GMT

A lot of comment on the impact on the Fed's much-anticipated rate rise in December. That's now looking much less likely according to Bloomberg charts as traders price in the shock that is a possible Donald Trump presidency.

#Fed rate hike odds plunge on potential #Trump presidency. 6hours ago traders priced in 82% chance of rate hike, now below 50 #ElectionDay pic.twitter.com/h0Cselzs56

Odds of a December rate hike plunge below 50% https://t.co/DVR0h67CbJ pic.twitter.com/Z0WkaHkXdL

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