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.

You can read Larry’s whole piece here.

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.

Levy said Trump’s often outrageous campaign pledges to build a wall with Mexico and tear up global trade agreements “will fade, with no material follow through or implementation” and “no wall will be built between Mexico and the US”.

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.

Luca Paolini, chief strategist Pictet Asset Management, declared Trump “no friend of trade” and warned that his protectionist streak poses “perhaps the biggest threat to both world growth and financial markets”.

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.

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:

• Near-term drag: Shaved 0.5pp from first and second quarter GDP growth, thereby lowering the annual number from 2.1% to 1.8%.

• A more cautious Fed: We expect 1 rather than 3 Fed rate hikes between now and the end of next year with the probability of a December hike falling to 1-in-3.

• Given the high level of uncertainty about the exact policy changes at this stage, we are assuming that trade tensions and fiscal stimulus have offsetting impacts on growth in the medium term.

• While a wide range of outcomes is possible, the risks to the economy seem to be skewed more to the downside.

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.”

Just hours after Trump’s election, Judy Shelton, his only female economist adviser, told the FT that Trump wanted to a new chair of the Fed. She said:

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.

Trump has repeatedly criticised Yellen for not raising interest rates fast enough. The market expected the Fed to raise rates in December, but Trump’s election has - ironically - made a rate rise much less likely.

On Tuesday afternoon, when it looked like Clinton was odds-on to secure the White House the probability of a December rate hike was 81%, according to CME Group. Now it is 67%.

Trump has repeatedly said he is unlikely to nominate Yellen to continue as Fed chief when her term expires in early 2018. He wants to replace her with a Republican who follows his economic thinking.

The Fed increased the benchmark federal funds rate to between 0.25-0.5% in December 2015, and has held there since due to various national and global uncertainties.

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.

But Ablin believes that there are likely to be issues ahead. Among today’s big gainers are pharmaceutical companies. Investors now believe will escape the price caps Clinton had proposed and benefit from Trump’s pledge to cut regulation. But those companies do the majority of their business overseas.

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

Ablin believes today’s calm is unlikely to last and that Trump’s inexperience in foreign policy, and his comments on trade, are likely to cause volatility in the weeks and years ahead.

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.

Slim’s personal fortune fell by as much as 9.2% as the Mexican peso plunged by 13% before stabilizing at 8% down. The nation’s central bank governor and finance minister were forced to reassure the nation that the country’s finances are safe.

The top 10 Mexican billionaires on the Bloomberg’s index lost a combined $6.5bn. Overall, the world’s wealthiest people lost $41bn.

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.

We have just been through one of the most contentious elections in memory, which can make it even harder to put our differences aside. But that makes it more important than ever to bind the wounds of our nation and to bring together Americans from all walks of life. Recognizing that our diversity is a core strength of our nation, we must all come together as fellow patriots to solve our most serious challenges.

Leaders from across the public, private and nonprofit sectors need to collaborate to find meaningful solutions that create economic growth and greater opportunity for all.

America is best when we come together with clear leadership, expertise and the political will to take on difficult challenges and get things done. No one should ever doubt the strength and resilience of our country and our democracy.

J.P. Morgan Chase has a proud history of supporting our communities and our countries. Through your outstanding efforts, we have built a great company that will continue to thrive – as we continue to focus on helping to serve our clients and communities. We will also continue to help address the important public policy issues of the day and the underlying economic challenges throughout the world.

I’m optimistic about America’s future and the role our company will continue to play as we help the nation address our challenges and move forward together. Jamie

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.

Private prison operator Corrections of America surged by as much as 60% in early trading before settling back at a 41% increase. Rival operator GEO Group was also up 18%.

The companies are soaring as analysts reckon that Trump will row back on the Department of Justice’s ruling this summer to phase out privately run jails. The companies could benefit still further from Trump’s plan for the mass deportation of immigrants.

Analysts at Height Securities said:

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.

Oil companies are benefiting from Trump’s pledge to make America “energy independent”, tear up red tape and allow oil and gas exploration in new areas. He has also vowed withdraw the US from the Paris climate accord, and wants to end the “billions and billion and billions” given to UN climate programmes and clean energy development.

Big pharma companies are also gaining, as Hillary Clinton had pledged to bring in controls to prevent pharmaceutical companies from hiking the price of drugs following recent scandals. Shares in Pfizer, the world’s largest drug company, are up 7%.

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.

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

So much for the Trump slump....

Pharmaceuticals companies, infrastructure providers and banking stocks are leading the way (for reasons explained earlier).

Conner Campbell of trading firm SpreadEx says investors have digested the election result with impressive speed. But the long-term implications of the result simply aren’t known yet.

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.

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.

And if he does cut taxes, boost infrastructure spending and impose trade curbs, then inflation would rise and the Fed might raise borrowing costs faster than currently anticipated in 2017 and 2018. That makes the dollar a more attractive asset.

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

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.”

Kelly was sceptical that Trump would immediately pull out of trade agreements without knowing what to put in their place.

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

With the economy effectively at full employment, Trump might even increase immigration of desperately needed skilled workers, Kelly said – after all the property tycoon used many immigrants himself to build his hotels in Florida.

A couple of photos from Wall Street:

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.

Fitch also warn that US growth would suffer, and prices would rise, if Trump pulled America out of NAFTA and imposed new tariffs on imports from China.

However, Fitch have no immediate plans to downgrade America from its current gold-plated rating of AAA/Stable, thanks to the country’s “unique strengths” (such as a reserve currency, and the ability to print as many US dollars as it ever needs)

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

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

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

• Dow Jones: up 21 points at 18,355, +0.1%
  
• S&P 500: up 2 points at 2,141, + 0.1%
  
• Nasdaq: down 16 points at 4,780, -0.5%.
  

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

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.

Shares in biotech companies are rocketing.

Hillary Clinton had pledged to fight price-gouging by biotech firms, a pledge that sent shares sliding back in August.

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

• The US stock market is expected to drop by over 1% following Donald Trump’s victory
• In volatile trading, Britain’s FTSE 100 has recovered from its early selloff and is now slightly higher
• The US dollar has recouped its overnight losses, and just hit a one-week high against the euro
• The Mexican peso has plumbed record lows, and is now down 10% today at 20.22 peso to the dollar
• After wild swings, the yield (interest rate) on US Treasury bills is up. Traders anticipate higher US inflation and debt-fuelled infrastructure spending

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:

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.

However, some market indicators suggest the Fed could still hike next month. But with so much uncertainty, this could change fast....

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

There was an initial surge of money into 10-year Treasuries as Trump’s victory became clear around midnight Eastern time, as investors looked for a safe haven. That pushed down the yield on the bonds towards 1.7%.

But that move swiftly reversed after Trump’s victory speech, as the markets anticipated a jump in borrowing and higher inflation. They dumped Treasuries, pushing yields higher.

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.

The WSJ has two theories for the spike:

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.

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

Stock markets (column 1) and emerging market currencies (column 2) are down, while the cost of insuring government bonds using a credit-default swap (column 4) has jumped.

But commodity prices are up (column 5), thanks to the weaker US dollar and the prospect of higher infrastructure spending.

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

That rally has unwound a little, but bullion is still up 2% at $1,301 per ounce.

Adrian Ash, head of research at BullionVault.com (a gold trading site) says it was the busiest day since the Brexit vote.

“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.”

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.

Jonathan Platt, head of fixed income at Royal London Asset Management, sa

“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.

Richard Buxton, head of UK equities at Old Mutual Global Investors, also spies higher inflation and government borrowing.

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.

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...

The question now is how long will all of this last. Markets generally rebounded quite well after Brexit but this was aided by the rapid response of the central bank and the UK quickly getting its political house in order, providing reassurance for investors. While Trump slightly soothed some concerns in his victory speech, uncertainty remains over what kind of a US he plans to lead and the Federal Reserve is unlikely to provide the same assistance that the Bank of England did at this stage. It will be very interesting to see whether they still intend to raise interest rates next month, as they have alluded to recently.

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.

Mahon adds that Trump’s approach to trade is the immediate threat:

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.

And in the medium term, Barings are expecting Trump to slash taxes, both for companies and wealthy Americans, and deliver the infrastructure spending programme he promised in his victory speech - probably funded by more borrowing.

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.

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.

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.

He also predicts that European politics could see Trump-style revolts:

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.

Here’s a thought:

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%.

That’s would be a more muted reaction than we expected six hours ago, when the US election results were rolling in. At one stage the Dow was expected to plunge by 800 points:

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.

BAE Systems (which makes everything from cyber-security systems to warships) is up 3.3%. That suggests that we’re entering a mood of heightened geopolitical tensions, and that European countries may not feel they can rely on NATO as much.

And the weaker dollar is helping to push up commodity prices, which is good news for copper producer Antofagasta (up 3.5%) as well as Randgold (6.4%) and Fresnillo (+8.6%).

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?

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.

David Kelly, chief global strategist at J.P. Morgan Asset Management, explains:

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.

Kelly also points out that Trump may struggle to push his promises through Congress, even though the Republicans have won control of Congress.

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.

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

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.

Ranko Berich, Head of Market Analysis at Monex Europe, says

“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.

Risk assets, in the meantime are being destroyed with the Peso the worst loser and equity futures pointing to sharp losses for US equities. Fixed income actives are pointing to lower expectations of interest rates, but it’s still far from clear if today’s election will cause the Fed to lose its nerve and hold fire on rates in December.

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

Our live results tracker has the full story:

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.

Today the United States stands not as a source of inspiration to the rest of the world but as a source of fear. Instead of hailing its first female president, it seems poised to hand the awesome power of its highest office to a man who revels in his own ignorance, racism and misogyny. One who knows him well describes him as a dangerous “sociopath”.

And what awesome power he will soon have. Republicans did not just defy almost every projection, prediction and data-rich computer model to win the presidency. They also won the House of Representatives and much of the Senate. Trump will face few checks on his whims. A man with no control of his impulses will be unrestrained, the might of a superpower at the service of his ego and his id....

Here’s the full piece:

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

Precious metals and pharmaceuticals firms continue to lead the rally, while financial stocks are still suffering from the fallout of the US election.

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

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

That means two things.

1) The markets are getting over their initial panic about Trump

2) They’re anticipating that he’ll boost government borrowing, to deliver on his pledge of infrastructure spending and tax cuts.

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?

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.”

So the pound has now shed its early gains, and back around $1.24.

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

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.

It’s now down just 58 points at 6786, a drop of 0.8%

It’s a similar story in Europe, where markets fell by 4% before rebounding....

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?

(So far Trump’s rhetoric in his victory speech - far more presidential than expected - has served to help steady the markets, with Europe off its worst levels)

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.

As far as the dollar goes, Saravelos says there is a tension at work:

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.

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

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.

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

Not the easiest challenge of the week, frankly, but we’ll do our best.

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.

(That means the long-term cost of government borrowing, which is at record low levels)

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.

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.

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

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.

Ashworth also fears that Janet Yellen might be forced out of the US Federal Reserve, given Trump’s repeated criticism:

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.

Matt O’Brien of Wonkblog agrees:

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:

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:

Rob Carnell of ING says investors simply don’t know what to expect from a Trump presidency:

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.

The markets aren’t alone in being wrong-footed by a Trump presidency. Political journalist James Forsyth says UK politicians are in the dark too....

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.”

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.

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.

Here’s the Kouk’s full article:

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.

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.

This is his opening line:

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.

And it could also have a huge impact on Japanese economy. The government of Shinzo Abe is desperate to push the value of the yen down and boost exports. But today’s huge move downwards by the US dollar is yet another blow to “Abenomics”. A higher yen is bad for companies, hence the big stock selloff.

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)

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.

But he does say that there could be benefits if Trump takes the White House, the possible continued fall in oil prices and the dollar (thanks to global uncertainty) and rise in gold prices, could be good news:

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.

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.

Trump criticised Yellen several times during the campaign for keeping interest rates too low (as flagged up earlier), and in May he gave a strong hint that he’d replace her in 2018 when her first term expires.

Naeem Aslam of Think Markets says this will add to the instability in the markets, as America enters a “political thunderstorm”.

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

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.

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.

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:

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.

It’s not a controversial view, to be fair, with many economists agreeing that the Fed has got itself behind the curve.

All the same, analysts are rethinking their expectations for a rate rise, which was nailed on for December until today because a sharp fall in stock prices and all-round uncertainty would not be the moment to increase borrowing costs.

Kathleen Brooks, research director of City Index, is also thinking about the impact on rates. She told Jill Treanor:

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.

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

• The Nikkei average in Japan is down 4.39%, while the ASX/S&P200 is off 2.23%. Seoul is off 2.46%. The Hang Seng in Hong Kong is down 2.82%.
  
• The mainland Chinese markets are not so locked into the global economy and are down a bit less. The CSI300 in Shanghai is down 1.18%.

• In currencies the US dollar has continued to fall and is now down 3.18% against the yen at 101.792. It has also fallen 1% against sterling and 2.22% against the safe haven Swiss franc.

https://twitter.com/TheBY2K/status/796196625626628097

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

She writes:

So why are the markets reacting like this to the prospects of a Trump victory? Jeremy Cook, chief economist at World First, tells me it is about uncertainty.

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.

At spread betters IG, Chris Beauchamp, chief market analyst, is also making comparisons to the night of the UK referendum, when markets had been pricing in a vote to remain for the EU.

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.

Investors and market experts are reacting to Trump’s stronger than expected showing.

Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey told Bloomberg News:

Put your seat belts on because this is going to be a bumpy ride. Investors will be moving in a chaotic fashion to get ahead of the information flow.

Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors, told Agence France-Presse:

It’s quite scary. The slightest move towards Trump moved the market very quickly. The slightest change in the odds is amplifying market moves and this just shows there’s a lot at stake.

Jill has sent tweeted this from World First in London:

Here is Australia the dollar and the local stock market has been smashed with a 4% loss so far.

The big financial stocks are being burned with investment bank Macquarie Group down 3.8%, and insurance giant QBE down 3.6%. the country’s biggest bank, the Commonwealth, is down more than 3%.

The Aussie dollar, which has recoverd much ground this year helped by rising commosity prices, has fallen 1.41% to US76.41c.

Things moving even more rapidly now despite a likely Clinton win in Virginia. The major equity markets are all down more than 2% now – the Hang Seng is off a whopping 3.5% – and oil is off 4%.

A big story is the state of the Mexican peso, which has now lost 11.5% of its value, according to Reuters.

Benito Berber, an analyst at Nomura in New York, offers Reuters some historical perspective on what this means for US-Mexican relations:

This is truly a historic moment. I don’t recall such an extreme outlook on the U.S. economy that could be so negative to the Mexican economy. You have to go back to when the United States took half of Mexico’s territory to find such a moment when US politics had such a potential impact on Mexico.

Gold has spiked by nearly 3% as investors look for safe havens. The spot price stood at $1,311.80 an ounce by 0235 GMT, a rise of 2.9%.

Oil, however, is down 2% as traders think a possible Trump victory would be bad for world trade.

But Vishnu Varathan, senior economist at Mizuho Bank, told Reuters the reaction in the gold market may be more limited compared with its surge when Britain voted to leave the European Union in June.

In this case whether it’s a Clinton win or a Trump win, at this point there’s really nothing left in the tank to aggressively trade gold.

Asia Pacific stock markets are now in freefall. The Nikkei is down 2.77%, the ASX is down 1.34%, the Kospi in Seoul is off 1.64% and the Hang Seng is down 1.88%.

In futures trading, the Dow is down nearly 500 POINTS.

The Vix futures, which predicts the likely course of the volatility or fear index when trading opens in the US on Wednesday, is showing a strong spike:

But in an Australian corner of Trumpland it’s looking a bit rosier.

More from Justin in Tokyo:

Uncertainty over the result in Florida and other key states has sent the Nikkei stock index below the 17,000 line, having made gains earlier in the day.

The monitors in this picture show the US dollar-yen rate, which will fall if Trump wins as investors sell the greenback. The bottom figure is the Nikkei share average, also falling on Wednesday lunchtime.

The markets in Hong Kong and mainland China came a little late to the party this morning and are currently in the red, perhaps reflecting the uncertainty about the Florida vote.

The Hang Seng in Hong Kong is down more than 2%, while the CSI300 on the mainland Shanghai is down slightly. More sanguine elsewhere:

• Nikkei up 0.85%
• ASX/S&P200 is up 0.53%
• Kospi up 0.27%
• TWSE in Taiwan is up 0.46%

A slight detour. Proof that nothing is being left to chance in this election. This man is vacuuming the flags at the Hilton in Manhattan ahead of the Trump/Pence rally later. I didn’t know they did that.

Volatility is the word for the markets at present with no one quite sure where the Florida poll is heading.

In Tokyo, Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, says:

Most market participants have priced in expectations that Clinton wins the election. However, early votes will likely sway the market and will cause volatility today

Meanwhile, in Hong Kong, Gary Huxtable, a client adviser at Atlantic Pacific Securities, said in a note.

Volumes are eerily low in the local markets this morning, which means a lot of investors are still sitting on the sidelines waiting for further confirmation of the outcome of the US election.

Or man in Tokyo, Justin McCurry, is keeping an eye on markets across Asia where trading has become volatile. Markets are open in Shanghai, Shenzhen and Hong Kong now too:

Shares are mostly higher in Tokyo and other Asian markets, the first to open as polls closed in the US. Japan’s Nikkei 225 index added 1.3% in early trading. In a further sign that investors are sticking to their belief that Clinton is heading for victory, the US dollar surged against the yen, a trend that will be welcomed by Japan’s exporters.

Elsewhere in the region, South Korea’s Kospi index added 0.4% and Australia’s S&P ASX/200 jumped 0.8%.

The Mexican peso has also seen a good deal of turbulent trading in the past half an hour.

Reuters reported that the peso – a touchstone for sentiment on the election as Republican Donald Trump’s trade policies are seen as damaging to its export-heavy economy – took a dive when Trump was reported to have a narrow lead in the sunshine state of Florida. Still too close to call though by the look of things.

You can’t argue with charts, so here’s another one showing the peso’s trading range since midnight UK time:

Any doubting how the markets can tell the story, check these out.

In case you’re wondering what to do with your spare cash in the event of a Clinton win, here’s a seven suggestions from MarketWatch*.

*Disclaimer: the blog doesn’t take any responsibility for the success or otherwise of your investment decisions. For any millennials reading, just think how many Lockheed Martin shares you could buy if you cut back on the avocado on toast.

Bourses in Malaysia, Singapore and Taiwan have opened and will be followed in a little less than half an hour by Hong Kong and the mainland Chinese markets.

Most experts expect a Trump win to cause a sharp selloff but economists at the National Australia Bank have been looking at the global economy and they reckon that it has shown great resilience throughout shcks such as Brexit and China’s surprise devaluation last year.

The upturn in global output has continued at a moderate pace through numerous shocks and growth scares – the Euro-zone’s worries, Brexit, Chinese market volatility to name just three – highlighting the underlying resilience of demand in the big emerging market economies of China and India and the ability of advanced economy central banks to keep the show on the road by means of historically low policy interest rates and asset buying aimed at cutting longer term bond yields.

They also see central banks moving towards more “normal” monetary policy - ie increasing rates.

•Central banks in the big advanced economies may well have now eased their policy by as much as they want to with US attention focussed on the profile of Fed rate rises, the Bank of England moving away from its rate cutting bias, the ECB about to consider if it will cut back its asset purchases next year.

Polls have closed now in in the key states of Florida, Ohio and North Carolina (except for the Durham area where there was an earlier problem with technology).

When we know how they’ve gone, we should get a much clearer picture from the markets.

The price of gold, which will spike if Trump looks like winning, is flat at $1,274.90 an ounce.

Bloomberg published a very good guide to what to expect from the markets in the event of a Trump or Clinton victory.

It fills in a few more details about the patterns I’ve discussed so far, but basically this is the synopsis:

Trump wins

Stocks down, US dollar down against developed currencies such as yen and sterling. Bad for emerging economies all round. Good for bond prices (yields will fall) and very good for gold as investors seek safety.

Clinton wins

Relief rally on the markets, dollar up against majors and bond prices to fall.

The markets are opening across more of the Asia Pacific region, notably the Nikkei in Japan and the Kospi in South Korea.

Both have followed the lead from the US in the past couple of days so expect to see them rise slightly until we get some results from the States.

In the meantime, it’s well worth reading what Guardian Australia’s economics writer Greg Jericho has had to say about the outlook for whoever wins the election.

His assessment is that weak growth, lower pay and an ageing population (similar problemns are faced by the Australian economy) spells a probable recession for the next president. Greg writes:

If history is any guide, the winner will have to deal with a recession.

Read the whole piece here:

Markets in the US and Europe closed up overnight on the back of that expectation of a Clinton victory, however narrow.

• The Dow Jones industrial average rose 73.14 points, or 0.4%, to 18,332.74.
• The broader S&P500 index also gained 0.4%, to 2,139.56.
• In London the FTSE closed on Tuesday up 0.5%
• Germany’s DAX rose 0.2%,
• The CAC-40 in France was up 0.4%.

Australia’s ASX/S&P200 benchmark is first out of the blocks in Asia Pacific and it has opened up 0.36%. That looks about par at the moment as golf-fan Trump might say.

As this tweet notes, the markets have voted and they’ve voted for Clinton. As well they might given all the cash they’ve put her way. Some would say.

Hello and welcome to live coverage of market reaction to the US presidential election. This could be a momentous day not just for the American economy but for the world as well. The stakes are high, as reflected in the days-long selloff we saw last week in the wake of the FBI’s surprise intervention in the election. The bureau’s decision to retreat has had the opposite effect, pushing Hillary Clinton back up in the polls and giving investors a bounce as the prospect of a President Trump ripping up international trade agreements and repatriating manufacturing jobs recedes again.

And yet ... many people – not least The Donald himself – point to the failure of pollsters to predict the UK’s Brexit result and how that caught the markets’ highly paid analysts and experts by surprise.

As Chris Weston of IG in Melbourne pointed out this morning (Australia time), the last six polls before the Uk referendum “averaged 51.7% to 48.3% (3.4 percentage points) for remain!”.

Referring to the surprisingly strong leave votes in the northern cities of Newcastle and Sunderland early on referendum night, Weston says:

As soon as Newcastle and Sunderland broke and the markets thought ‘this wasn’t supposed to happen’, then the sky darkened and the markets caved in. This election isn’t perhaps as binary as the UK referendum, but the way financial markets react today could be fairly similar in the sense that if Trump starts picking up the 50/50 states like Florida, New Hampshire, Nevada and potentially some of the more certain Democrat battlegrounds then the market could be wild.

So as our excellent election guide says, it’s time to buckle up and prepare for the ride.