The markets continue to digest the aftermath of the US presidential election after an action-packed 24 hours marked by wild swings across the asset spectrum. The US Dollar corrected lower against nearly all of its major counterparts having finished a tumultuous session on the upside yesterday. This may have reflected returning Fed tightening bets. Traders priced in an 82 percent chance of a December hike by day’s end.
It was the New Zealand Dollar that proved weakest on the session however. Prices popped after a widely expected RBNZ rate cut came bundled with a policy statement that played down the need for further easing. Sellers returned in force after central bank Governor Wheeler said policymakers “always have an open mind on FX interventionâ€. The Australian Dollar retraced upward having underperformed in yesterday’s trade.
A quiet economic data docket in European and US hours ought to make it easy for the US election outcome to continue dominating the spotlight. S&P 500 futures are pointing solidly higher in late Asian trade, suggesting the risk-on mood that took root yesterday as markets on-boarded an unexpected triumph by Republican nominee Donald Trump is poised to continue.
Sentiment initially crumbled as state-by-state returns began showing Mr Trump edging out Democratic rival Hillary Clinton, as expected. Things began to turn as Trump delivered a conciliatory-sounding victory speech foreshadowing plans to boost fiscal outlays on a large-scale “economic renewal†effort. This appeared to inspire an appetite for bargain-hunting, particularly in the context of deep intraday losses.
A focus on infrastructure projects delivered strong gains for materials and industrials shares. Financial and health care stocks scored the biggest gains however, presumably as traders priced out the probability of a stricter regulatory regime that was expected to be pursued by a Clinton White House.
