Markets shrug off Trump victory

UPDATE: The NZX50 opened strongly and in mid-morning trading was up 3.03%, nearly erasing its Trump-inspired dip late yesterday.

But Orion Health, an NZ tech highlighted as a company with exposure to Trump policies, has also rebounded, rising 4% to reverse yesterday's fall.

The ASX (up around 3%) and Nikkei (up around 6%) have also reversed yesterday's losses.

EARLIER: Like America's new president, markets are defying expectations.

Late yesterday, as it became apparent Donald Trump was on track for an upset win, S&P 500 stock futures plunged 5%, triggering an automatic trading halt. And the NZX50 fell 3.34% in late trading while the ASX200 was off nearly 2% and the Nikkei down 5.36%

But when US markets opened this morning, they dipped only slightly and subsequently rallied for the Nasdaq (+1.11%), S&P 500 (also +1.11%) and Dow (+1.40%) to all finish in positive territory.

Gold has shed some of its gains and the US dollar has recovered some of the ground it lost yesterday.

The Wall Street Journal notes that for gold and the dollar, the turning point was Donald Trump's surprisingly conciliatory acceptance speech.

And, more broadly, “Markets have just gone through this with Brexit – maybe it is learning lessons not to knee-jerk react,” Newton Investment Management portfolio manager Paul Markham told the Journal.

Investors are choosing to focus on the positive, from promised tax cuts to the benefits of stimulus spending and less regulation in some industries (which Mr Trump almost immediately backed up for the energy industry by appointing a climate-change skeptic to head his Environmental Protection Agency transition team).

Stocks with Trump exposure hammered
Although the market is resilient overall, some companies with exposure to Trump's protectionist policies have been hammered (and locally they included Orion Health, see below).

General Motors, which has moved a lot of manufacturing south to Mexico or north to Canada, has seen its shares fall close to 4% today. 

The trend was not universal, however. Despite the president-elect's war-on-Wall Street rhetoric, Goldman Sachs shares were up more than 3%. Investment banks are betting on reflation.

And shares in Caterpillar surged 7% on hopes Mr Trump would boost infrastructure spending as promised.

US Treasuries dropped amid expectations that a Trump presidency will boost spending and inflation. Yields on the 10-year note jumped 15 basis points to 2% as of noon in New York.

European markets positive
European markets, including the FTSE, were up around 1% in late trading.

But as in the US companies vulnerable to Trump policies have suffered. 

The Financial Times highlights that shares in Vestas, a Danish wind turbine manufacturer, were among the biggest fallers today, plunging around 10%, as investors worried about the future of renewable energy.

And carmakers that have a big manufacturing presence in Mexico — such as Daimler, BMW and Fiat Chrysler — all saw their shares fall by more than 3%.

Local impact
Here, as it became apparent Mr Trump would likely take the White House, FCNZ's Johnny Cochrane told NBR Radio that the brash New Yorker's victory would not be as bad as Brexit. He noted that the president-elect's promise to increase infrastructure spending could stimulate the US economy — though he added it would lead to inflationary pressure.

In a research note released last night. Forsyth Barr also warned that Mr Trump's policies would stoke inflation, in turn putting pressure on interest rates.

Forsyth Barr expects the Reserve Bank to press ahead with another OCR this morning, however [UPDATE: it did, reducing the official cash rate to a histroic low of 1.75%.]

Orion Health in the gun
A key stock to watch on the NZX50 today will be Orion Health [NZX:OHE].

The Auckland-based company, which is targeting $1 billion revenue, has profited from Obamacare, and in particular the Obama administration's state-by-state push to make private health providers share patient records.

Chief executive Ian McCrae has previously told NBR President Obama's reforms are too entrenched to scrap.

However, Mr Trump has pledged to repeal the Affordable Healthcare Act that underpins Obamacare as one of his first initiatives – and it's one area where he and the Republican majorities in the Senate and House see eye-to-eye.

Orion shares fell 3.45% in late trading yesterday.

Conversely, in the US "big pharma" stocks rallied on the assumption there would be less regulation.

Pfizer and Merck were up 7.4% and 7% respectively in late trading.