Early election results send Dow futures plunging 750 points

Early election results sent the Dow futures plunging on Election Night. (Getty Images)
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Early election results sent the Dow futures plunging on Election Night. (Getty Images)

UPDATE @ 11:57 p.m. (Nov. 8): The drop in the Dow futures continues, falling off more than 750 points as GOP presidential nominee Donald Trump's lead over Democratic rival Hillary Clinton continues, Market Watch is reporting.

Dow futures fell 750 points before modestly paring gains. They were down 728 points, or 4 percent, at 17,554 in recent trade. S&P 500 futures were down 97.25 points, or 4.6 percent, at 2,038.

The Nasdaq-100 futures were off 220 points, or 4.5 percent, at 4,584.

Asian stocks fell sharply, with Hong Kong’s Hang Seng Index down 646 points, or 2.8 percent, at 22,262. The Nikkei 225 slid 697 points, or 4.1 percent, to 16,477. Australia’s all-ordinaries index was off 126 points, or 2.4 percent, at 5,216.

Investors were unprepared for Trump’s performance, making it the second time this year markets have mispriced the odds of a major vote in one of the world’s largest economies. The first was the U.K.’s vote to leave the European Union on June 23.

The Financial Times is reporting that the Mexican peso — seen as the prime gauge of Trump’s fortunes — tumbled almost 12 percent, its biggest drop since the country’s 1994 devaluation crisis.

FIRST REPORT

The Dow futures have plunged by 600 points tonight in reaction to the possibility of businessman and GOP nominee Donald Trump winning the 2016 presidential race, several national media outlets are reporting.

According to the Washington Post, on Wall Street, Dow Jones Industrial Average futures were down more than 400 points, or roughly 2 percent. The Standard & Poor’s 500-stock index sank 63 points, while the tech-heavy Nasdaq dropped more than 100 points.

The uncertainty over the outcome of one of the most contentious presidential elections in modern history rattled investors around the world. Japan’s Nikkei index plunged 200 points, or 1 percent, while Hong Kong’s Hang Seng index lost 416 points, or nearly 2 percent. Meanwhile, the Mexican peso — which has fallen when the Republican nominee rose in the polls during his campaign — nosedived to an eight-year low, according to Bloomberg.

“Early results are showing a very tight race, tighter than the market expected,” said Trevor Charsley, senior markets adviser at financial services firm AFEX. “If Florida, or the other key states, declare for Trump we may see some real volatility ensue.”

In the United States, stock markets had surged during the trading day Tuesday amid polling indicating Democratic nominee Hillary Clinton was likely to win the Oval Office. But as results began trickling in showing Trump with a lead in key swing states such as Florida and Ohio — and even ahead in Virginia, the home state of Clinton’s running mate, Tim Kaine — financial markets began to panic.

CNBC reported that investors moved into bonds and stocks cratered as traders questioned whether Democrat Hillary Clinton could win the race, as expected. The Mexican peso fell 10 percent against the U.S. dollar.

“I would say the market is a bit more cautious as it doesn’t seem to be such a quick and decisive victory for Hillary as it seemed,” said Ian Lyngen, head of U.S. rate strategy at BMO. “But it’s not over yet.”

In Asia, the Nikkei was down more than 2 percent, erasing a more than 1 percent gain on the day. The S&P 500 ended Tuesday’s session higher, up 8 at 2,139, as markets speculated that Clinton was in the lead.

The Mexican peso, which has been a proxy for Trump, was down about 8 percent against the dollar. 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 continues in the Western U.S., 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.”