by David Child
Turbulence in the European financial markets has started to ease. Donald Trump’s victory speech calmed nervous openings in London and in European indices. But his words came too late to halt the slide in Asia and on the Mexican peso.
Trump’s surprise victory in the US presidential election led to a large scale sell off in stocks and a rally in haven assets as investors sought to assuage uncertainty.
Early signs emerging from the European markets this morning were negative. The Stoxx Europe 600 Index had fallen by 0.7 per cent as of 9.11am GMT.
The UK’s FTSE 100 opened down 145 points, approximately a 2 per cent drop from the level reached at the close of trading on Tuesday. More than £37 billion was wiped off the top 100 UK-listed companies overnight.
The market has since stabilised, swiftly recovering most of the losses and leaving the current state of the index little changed from the previous trading session.
In mainland Europe, France’s Cac and Germany’s Dax market have pared back losses to a degree following initial falls of approximately 2 per cent.
The markets are signalling that investors seem to be increasing in confidence again following the electoral shock. Trump’s victory speech, in which he adopted a notably more conciliatory tone than he used in his campaign, appears to have offered a degree of comfort to the markets.
Elsewhere the effects of Trump’s victory were more disconcerting. The Mexican peso nose-dived, dropping more than 13 per cent in value before recovering marginally. The currency tumbled to an extent not seen since 1994-1995.
Asian financial markets also reacted negatively to Trump’s upsurge in the polls, with the Nikkei index in Japan dropping approximately 5.3 per cent. Honk Kong’s Hang Seng index also fell, losing more than 400 points, equating to around 2 per cent of the market.
During his election campaign, Trump stated he would reverse long-standing trade agreements if elected and increase tariffs on imports from both Mexico and China.