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Global Markets Roiled as Trump Takes Lead in Election Vote Count

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  • Global Markets Roiled as Trump Takes Lead in Election Vote Count

Global markets were thrown into disarray as results from the U.S. election indicated that Donald Trump may prevail over Hillary Clinton in the race for the presidency, shocking traders who had focused on polls in recent days showing the opposite.

Panicked investors rushed to unwind bets they’d piled on amid predictions Clinton would sweep to victory, fueling demand for haven assets. Futures on the S&P 500 Index plunged by a 5 percent limit that triggers trading curbs and Asian shares sank by the most since the aftermath of Britain’s shock vote to leave the European Union. Mexico’s peso had its steepest plunge since 2008 on concern a Trump win would lead to more protectionist U.S. trade policies. Gold jumped by the most since Brexit, surging with the yen and sovereign bonds.

Based on the states that have been called, Trump had 244 of the 270 Electoral College votes needed to claim the White House and Clinton had collected 215, while the Republicans were also on track to retain control of Congress. A Trump victory, buttressed by electoral gains from Florida to Ohio, had been portrayed by analysts as having the potential to unhinge markets that were banking on a continuation of policies that coincided with the second-longest bull market in S&P 500 history. Brexit was the last major political shock and led to the S&P 500 sliding 5.3 percent in two days.

“With more votes being counted and it looking more and more like Trump will actually get in, the market’s having a massive dive,” said Karl Goody, a private wealth manager at Shaw and Partners Ltd. in Sydney, which oversees about A$10 billion ($7.6 billion). “This has caught a lot of people off guard. We’re all very surprised.”

Most polls showed Democratic candidate Hillary Clinton ahead of Trump going into the vote and websites that took bets on the victor had put the Democrat’s odds of winning at 80 percent or more. Trump pledged to clamp down on immigration to the U.S. and renegotiate free-trade agreements with countries including Mexico.

Among key moves in financial markets:

  • S&P 500 Index futures slide as much as 5 percent
  • FTSE 100 Index futures drop 3.4 percent
  • MSCI Asia Pacific Index drops 2.6 percent
  • Mexican peso tumbles as much as 12 percent, breaching 20 per dollar for first time
  • Japanese yen climbs versus all major currencies
  • Euro, Swiss franc rise at least 1.7 percent
  • Gold jumps 3.1 percent, most since Brexit
  • Crude oil slides 2.5 percent
  • 10-year U.S. Treasury yield drops five basis points to 1.80 percent

Stocks

S&P 500 futures tumbled by the maximum 5 percent loss permitted on the Chicago Mercantile Exchange before trading curbs are triggered, and were down 4.3 percent as of 3:20 p.m. Tokyo time. The restrictions last came into force in the wake of the Brexit vote and set a floor price for the contracts through the remainder of the overnight trading session.

The MSCI Asia Pacific Index was down more than 2 percent, with benchmarks in India, Japan and New Zealand posting the biggest declines in the region.

“If Trump becomes president and both the House and Senate are Republican, he can do whatever he likes,” said Norihiro Fujito, a Tokyo-based senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “We’re in the midst of a violent unwinding of positions globally as investors deal with an unexpected, risk-off situation.”

Currencies

Mexico’s peso plunged to a record low of 20.7818 per dollar, and was the worst performer among currencies worldwide. Other higher-yielding currencies sank, with South Africa’s rand weakening 3.1 percent and South Korea’s won down 1.1 percent.

“This would be the biggest political upset in living memory,” said Jeremy Cook, chief economist at London-based World First U.K. Ltd. “The significance is almost unquantifiable.”

Currencies viewed as havens strengthened, with the yen climbing 2.6 percent and the Swiss franc gaining 1.6 percent.

Bonds

Treasuries rallied as traders saw the likelihood of the Federal Reserve interest-rate increase in December dwindling to less than 50 percent, based on overnight indexed swaps. The yield on the 10-year note declined four basis points to 1.82 percent. Its daily trading range — 0.18 percentage point — was the largest since June 24, the day after the Brexit vote.

“It’s looking increasingly likely that he’s got this,” said Robert Tipp, chief investment strategist in Newark, New Jersey, for the fixed-income division of Prudential Financial Inc. “We’re seeing the market scramble, we’re seeing fear of trade war seeping into Treasury prices.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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