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Global Markets React as Trump Wins the 2016 US Election

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Trump victory triggers market reaction

The results of the general election are out: Republican nominee Donald Trump has won the 2016 US presidential election. The news was unexpected by many, as opinion polls had been largely been favoring Democratic nominee Hillary Clinton. 

The market’s reaction to this important event, which will surely mark a page in America’s political history, is worth taking a look at.

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Global stock market

The US benchmark S&P 500 Index rose 1.1% on November 9, 2016. Funds tracking the index, the SPDR S&P 500 ETF (SPY), the iShares Core S&P 500 ETF (IVV), and the Vanguard 500 ETF (VOO), also rose ~1.1% each. Developed markets as tracked by the Vanguard FTSE Developed Markets ETF (VEA) fell 0.16%, with Europe (VGK) rising 0.5% and Japan (EWJ) falling 0.84% on the day.

Volatility

Volatility plummeted as uncertainty over who would win the election fell with Trump’s victory. To a good extent, the result seemed priced in by the market, despite popular opinion poll data hinting at a Hillary Clinton. The CBOE Volatility Index, also known as the Fear Index, fell more than 28% on November 9 to close at 13.47. The index stood at 18.47 on November 8.

Consequently, funds that seek to track volatility such as the PowerShares S&P 500 Low Volatility ETF (SPLV) recorded -0.7%, while the Vanguard Global Minimum Volatility Investor Shares (VMVFX) rose 0.25% on November 9.

Emerging markets

News of Trump’s victory sent emerging markets (EEM) falling 3.2%, with investors in Mexican equities (EWW) losing 8.5% and investors in the Chinese stock market (FXI) losing ~2.4% in a single day.

Among emerging markets (EEM) (VWO), a Trump victory stands to impact Mexico and China the most. The Latin America–tracking iShares Latin America 40 ETF (ILF) recorded a -4.4% return on November 9.

The news also sent an emerging market currency reeling over 13%. Read on to find out more.

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