Wednesday November 9th

9-11-2016

US stock futures slash losses; Dow futures down less than 200 points

U.S. stock index futures came well off session lows after Hillary Clinton conceded the presidential election to Donald Trump. Dow futures were about 190 points lower after earlier falling 800 points. Stock futures fell and bonds rallied as markets feared Donald Trump could pull off an upset and take the White House. Just before midnight ET, S&P 500 futures and Nasdaq 100 futures plunged more than 5 percent. Around 8:03 a.m. ET, they held about 23 points lower and 76 points lower, respectively. That was just above levels identified as "limit down" by the CME, which confirmed to CNBC that S&P and Nasdaq futures can trade above but not below those prices until 9:30 a.m., ET, when the Wednesday U.S. trading session begins. Trade volume in eMini S&P futures was about 17 times the average daily volume, according to a note from Citi. Investors moved into the safety of bonds Tuesday evening as traders questioned whether Democrat Hillary Clinton could still win the race. The Mexican peso briefly fell more than 10 percent against the U.S. dollar. "Right now, the markets are heading for the hills, but we'll see," said Robert Tipp, chief investment strategist, global bonds and foreign exchange at Prudential Fixed Income. "That's a function of fear as much as fact." Tipp said it's not clear whether Trump would be as disruptive as the markets worry he could be, since it's unclear what parts of his platform would be pursued and what type of individuals he would choose for his Cabinet. U.S. futures were volatile as election results started rolling out at around 7 p.m. ET. Dow futures were up as much as 100 points at one point before turning south as state after state were projected to have picked Trump. Keith Parker, global equity strategist at Barclays who studied what might happen if Trump were to win, projected the S&P 500 could move initially to around 2,000, if the Republican businessman prevails. The S&P 500 ended Tuesday's session higher, up 8 at 2,139, as markets speculated that Clinton was in the lead. "Markets would be volatile. Equities would take their cue from confidence indicators — what Trump says, what the GOP leadership does," he said. Trump was the projected winner in some important battleground states, including Florida and North Carolina, but others remained too close to call. While the winner has yet to be determined, Trump appeared to be on the verge of a stunning victory. "What bothers the markets are uncertainties about a new president, his issues of trade, and people are worried about how other world actors will react to a Trump presidency," if he wins, said Strategas head of policy research Dan Clifton. NBC News projected Republicans will retain control of the House and the Senate. Wall Street has favored a win by Clinton but Republican control of Congress. In Asia, the Nikkei was down more than 4 percent, erasing a more than 1 percent gain on the day. In South Korea, the Kospi finished down 2.25 percent, or 45 points, at 1,958.38. Hong Kong's Hang Seng was down 2.44 percent by mid-afternoon. Chinese shares were moderately lower compared to the rest of the region, with the Shanghai composite ended down 0.61 percent, or 19.12 points, at 3,128.77 and the Shenzhen composite closed 0.575 percent lower, or 11.97 points, at 2,068.47. The Mexican peso, which has been a proxy for Trump, was down sharply against the dollar, after rallying during the U.S. trading day. Trump has said he would build a wall along Mexico's northern border and break trade deals with the country. The U.S. dollar also gave up early gains against the yen and Swiss franc. While voting finished in the Western states, the markets reacted as if Trump was heading to victory after trading higher for two days on optimism that Clinton could win. "I think this could be the second strike of populism if Trump wins and I think that it's probably a bigger surprise for international markets than it for the U.S.," said Jack Ablin, CIO at BMO Private Bank. "Right now it's just emotional. Everything from the last two days would get undone, and then we'd have to take it down. We could see a 600 point (Dow) reversal." Wall Street has favored a Clinton win because of some of Trump's policies, such as his positions on trade. "Emerging markets will just get annihilated. Oil gets hammered, and we'll see. ... It's still early," said Ablin. Gold futures also traded higher in a safety play, rising 2.19 percent, or $27.90, to $1,302.40 per ounce. Oil reversed most of their early losses of almost 4 percent to trade at about $46 a barrel on Wednesday, as the market recovered from an initial Brexit-like reaction to Donald Trump's surprise victory in the U.S. presidential election. The result sparked a flight from risky assets in a move analysts compared to June's referendum in which Britons voted to leave the European Union. But the dollar steadied and European stocks pared losses, with traders citing what some saw as a conciliatory speech by Trump following his win. Brent crude was down 7 cents at $45.97 a barrel by 8:41 a.m. ET (1341 GMT), after falling to $44.40, the lowest since Aug. 11. U.S. crude fell 22 cents to $44.76, off a session low of $43.07.