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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.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Slips With Energy Prices in Europe Halts Record Rally

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Oil dipped toward $72 a barrel in New York after prices of energy commodities in Europe halted a record-breaking run.

West Texas Intermediate futures fell 0.6%, having reached the highest intraday level since early August on Wednesday. A rally in European gas and power prices to unprecedented levels was set to end as industries were starting to curb consumption. The surge in energy rates could temporarily boost diesel demand by as much as 2 million barrels a day as consumers switch fuels, according to Citigroup Inc.

Still, the bullish signals for oil are continuing to increase. U.S. crude inventories dropped by more than 6 million barrels last week to a two-year low, according to government figures, as coronavirus vaccination programs permit economies to reopen. Chevron Corp. Chief Executive Officer Mike Wirth warned that the world is facing high energy prices for the foreseeable future.

The investor optimism is showing up in key oil time spreads widening. Trading of bullish Brent options also surged to a two-month high on Wednesday.

Prices have been pushed higher in recent days “by supply outages combined with expectations of switching from gas to oil in the power sector,” said Helge Andre Martinsen, a senior oil market analyst at DNB Bank ASA. “We still believe in softer prices toward year-end and early next year as curtailed production returns and OPEC+ continues to increase production.”

Strong prices for gas, liquefied natural gas and oil are expected to last “for a while” as producers resist the urge to drill again, Chevron’s Wirth told Bloomberg News. Norway’s Equinor ASA said Thursday it also expects European gas prices to remain high over winter.

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Energy

Fuel Scarcity: Petrol Sells N220 Per Litre in Nsukka

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Premium Motor Spirit, otherwise called petrol, now sells for between N200 and N220 per liter at the independent marketers’ service stations in Nsukka, Enugu State.

The News Agency of Nigeria is reporting the hike in the price against the official pump price of N162 per liter.

It said it started about a fortnight ago due to the scarcity of the commodity in the town and its environs.

Some residents of the town expressed deep worry over the development in separate interviews with NAN on Wednesday.

A civil servant, Stephen Ozioko, said the situation had further compounded the economic difficulties in the area.

Ozioko said many private car owners had been compelled to park their vehicles at home and move around in public transport.

He said: “Since the scarcity started, I decided to park my car and take public transport to the office and back home. N220 per liter is exorbitant and I cannot afford it considering my salary as a civil servant. I shall continue to use public transport until the situation returns to normal.”

A building material dealer, Timothy Ngwu, said the development had also led to an increase in transport fare in the area.

Ngwu said: “Some people now trek from Nsukka Old Park to Odenigbo Roundabout because of the 100 percent hike in fares from N50 to N100 by tricycle.

“Before now, transport fare from Nsukka to Enugu was N500, but transporters now charge between N800 and N1000.”

Also, a commuter bus driver, Victor Ogbonna, described the scarcity and hike in the price of petrol as “unfortunate and an ugly development”.

Ogbonna added: “Today, only a few filling stations are selling the commodity in Nsukka town, while others are shut.”

He alleged that some filling stations, which claimed to be out-of-stock, were selling to black marketers at night.

He said: “This is why black marketers have sprung up everywhere in the town, selling the commodity for about N300 per liter.”

NAN reports that virtually all the major marketers in the area have stopped the sale of petrol, claiming to be out-of-stock.

The people called on the government to urgently intervene in order to bring the situation under control and also put an end to its harsh economic effects on the messes.

NAN.

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Energy

DPR Targets N3.2T Revenue by Year-End

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Department of Petroleum Resources (DPR)-Investors king

Nigeria’s Department of Petroleum Resources (DPR) will hit the N3.2 trillion revenue target by December 2021, according to its Director/ Chief Executive Officer, Mr Sarki Auwalu.

Auwalu made the disclosure when he led a delegation of the DPR management team to the Executive Secretary of Petroleum Technology Development Fund (PTDF), Mr Bello Gusau, in Abuja on Wednesday.

He said that 70 percent of the revenue projection had already been met. “Last year, we exceed our revenue budget. We were given N1.5 trillion but we were able to generate N2.7trillion.

“This year, our revenue budget was N3.2 trillion. By the end of August 2021, we have generated up to 70 per cent.

“So, we with September, October, November and December, it is only the 30 per cent that we will work over,’’ he said

He noted that the government took advantage of fiscal terms within the old and new legislation, thereby creating a level of increased signature bonuses.

“We reorganise the work programme that is normally being done in the DPR to key into the new operational structure as we see it in the bill, now an act.

“That programme is being handled by the planning and strategic business unit as against what we use to have because the entire work programme is supposed to show not only technical but also commercial and viability of oil fields and to guarantee the return on investment for investors.

“We have also created an economic value and benchmarking unit to key into the new fiscal provisions of the PIA,’’ he said.

Commenting on capacity, Auwalu said the country stands at the advantage of exporting skills to emerging oil and gas countries across Africa with proper implementation of the newly passed Petroleum Industry Act.

This, he said, the DPR was ready to partner with the Fund to continue to build capacity in the oil and gas sector

He noted that the Federal Government was determined to create leeway that would encourage investors and drastically improve the nation’s petroleum industry.

He further noted that no fewer than 300 legal battles in the oil and gas industry in Nigeria, which had been stalled for the past 20 years in courts, had been resolved through alternative dispute resolution.

According to Auwalu, the DPR is strategising well to ensure effective implementation of the PIA.

Responding, Gusau commended the DPR for enabling the industry and enhancing business activities in the oil and gas sector.

He said that DPR remained the head of the oil and gas industry in Nigeria adding that the Fund was grateful to benefit from the wealth of ideas from DPR.

“The last time we visited, we had a good discussion and issues raised are being implemented like tracking the inflow of funds in signature bonus accounts.

“We extended the meeting and involved ministry of Finance, Accountant General office and even the Central Bank of Nigeria (CBN).

“Sitting at field development plans and attending significant meetings, helped us to know where and what the industry is trying to do and it also helps to inform our decisions in training and capacity plans,’’ he said

He urged the DPR to continue on its effort to ensure an efficient and productive petroleum industry in Nigeria

He assured collaboration with all as the head of the implementation committee of the Petroleum Industry Act. (NAN)

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