Markets plummet on prospects of Trump presidency

New Zealand shares tumbled as Donald Trump took the lead in the US presidential race, with every stock on the benchmark index dropping.  

Xero, Heartland Bank and SkyCity Entertainment Group led the decline.

The S&P/NZX 50 Index dropped 3.3% – the biggest percentage loss in over five years – or 230.14 points, to 6,664.22. Every stock in the index fell. Turnover was $138 million.

"With Mr Trump leading and forecasts showing he's got a pretty good chance of winning, it's certainly brought equity markets under significant pressure this afternoon," said Grant Williamson, director at Hamilton Hindin Greene. "It's across the board, investors are very nervous and starting to see the writing on the wall so are beginning to hop out rather quickly."

Markets across Asia plummeted in the afternoon's trading. At 5:15pm local time, Australia's S&P/ASX 200 was down 1.9%, Hong Kong's Hang Seng had fallen 2.8%, and Japan's Nikkei 225 was down 4.5%.

"We can expect a fair amount more volatility tomorrow," Mr Williamson said. "He's a really unknown quantity, the market hates uncertainty and I think that's what's going to happen for some time if they see Trump succeed. It really is unknown territory. We had the UK exit but this is a lot bigger than that, it's going to be interesting days ahead."

Xero, an often volatile stock with a large number of foreign investors, was the worst performer on the index, down 5.8% to $16.95. Heartland Bank dropped 5.3% to $1.42 and SkyCity Entertainment Group fell 5.2% to $3.44.

Metro Performance Glass shed 5.2% to $2.01, Summerset Group Holdings fell 5.1% to $4.65 and A2 Milk Co dropped 4.9% to $1.96.

Mainfreight was one of the least-worst performers, down 0.6% to $18.50. The transport and logistics group posted a 27% gain in first-half profit to  $41.8 million as margins improved in New Zealand, Australia, Asia and Europe, and expects a continuation of stronger trading in the second half. Sales climbed to $1.14 billion from $1.11 billion.

Outside the benchmark index, Mercer Group was unchanged at 1.3c. The unprofitable stainless steel fabricator plans to buy Hastings-based Haden & Custance for $2.25 million as it changes into a food processing and packaging business. 

EARLIER:

Stock markets are reeling as US presidential election results show the possibility of a win by Donald Trump, sending investors to so-called safe haven assets.

The S&P/NZX 50 Index fell 2.4% to 6,732.41 at 4.05pm, having traded higher most of the day. Stocks fell across Asia dropped this afternoon with the Nikkei 225 Index down 2.2%, the Hang Seng falling 1.7%, and the S&P/ASX 200 Index 1.7% lower. 

S&P 500 futures were recently down 3% to 2071, a level not seen since the days immediately after the U.K.’s Brexit vote.

Dow Jones Industrial Average futures were off 390 points, or 2.1% to 17890.

The Mexican peso had its biggest one-day drop since 1994's Tequila crisis, falling around 8 percent against the US dollar, on the prospects of a US president who has threatened to build a security wall to keep Mexicans out. 

Clinton is seen as the safe candidate, while Trump's trade policy and volatility create uncertainty which investors hate. The New York Times most recently forecast Republican candidate Donald Trump has a 68 percent chance of winning the presidency, having swapped from preferring Democratic presidential candidate Hillary Clinton's chances just before 3:30pm New Zealand time.

Safe-haven global currencies such as the Japanese yen strengthened against the US dollar this afternoon. The yen strengthened to a month-high of 102.01 against the dollar while spot gold climbed 2.3 percent. New Zealand two-year swaps were down 5 basis points to 2.15 percent while 10-year swaps are unchanged at 2.92. 

Global markets became increasingly unsettled last month at the prospect of Trump succeeding in his bid for the White House, following a letter from FBI director James Comey on Oct. 29 announcing the FBI was reviewing emails belonging to Clinton found in the unrelated investigation into Anthony Weiner. The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street's fear gauge, rose to a five-month high at its last trade on Nov. 4.

On Monday morning local time, the FBI confirmed no criminal charges are warranted against Clinton, pushing markets higher and causing the VIX to drop 16.9 percent, its biggest fall since June.

BusinessDesk