iStock/Thinkstock(NEW YORK) — Markets like predictability, and Tuesday night’s results have been anything but predictable.
Global markets, predicting a Clinton win for sometime now, were caught flatfooted Tuesday night and are now in disarray.
The markets became jittery just before 9 p.m. Eastern Time on Tuesday night, as it became clearer that Florida might break for Donald Trump.
Over the next few hours as Trump’s chance to clinch the presidency become more probable, investors’ screens began flashing red in a scene reminiscent of the massive sell-offs that followed the United Kingdom’s shock vote on June 23 to leave the European Union — a vote known as Brexit.
Investor around the world scrambled to re-calibrate positions taken under the presumption of a Clinton victory.
“This is obviously not the outcome that markets had priced in at 4 p.m. today,” Nick Colas, chief market strategist at Convergex, told ABC News by phone from New York. “The way the markets were looking going in and the way polls and offshore odds were looking there was going to be a 90 percent chance of a Hillary Clinton victory, and a small chance of an upset.”
“Now, looking at it just a few hours later, that was all wrong — 100 percent wrong,” he added.
Stock Futures Sell-Off
At one point, the Dow futures were down around 800 points. That massive sell-off — had it held until U.S. markets opened later Wednesday — would be worse than even the darkest days of 2008, amid the financial crisis. The index’s worst day in history — on Sept. 29, 2008 — saw it slice off about 778 points in just one day.
At time of writing, markets remained tumultuous. Shortly after 2:30 a.m. Wednesday morning, Dow futures were down around 500 points or about 2.75 percent.
S&P 500 futures, another index, were down about 70 points, or more than three percent.
Peso Takes a Pounding
But the real plunge was seen in an asset that has become somewhat of a celebrity during this election cycle: the Mexican Peso.
The exchange rate between the Peso and the U.S. Dollar has become a bellwether during this election due to Trump’s policy proposals regarding trade and immigration. Between 8 p.m. and midnight the Peso lost more than 13 percent of its value.
Its value plummeted past 20 pesos-to-the-dollar and was hovering there just before 3 a.m. on Wednesday morning, though it recovered slightly from its lowest point of the evening.
The Mexican central bank and finance ministry announced a joint press conference for Wednesday morning, presumably to address the market effects of the U.S. election outcome.
Investors Flock to Gold
Meanwhile, gold, the go-to safe haven for investors during tumultuous times, shot up. Between 8 p.m. and midnight, the precious metal gained more than 4.75 percent.
It was gold’s largest single-day jump since the Brexit vote in June, according to Bloomberg.
“In some ways it’s bigger than Brexit,” Colas said of Tuesday night’s outcome. “It’s not just a question of a treaty — or a relationship between governments — it’s the nature of government.”
Like the Peso, gold backed off of its most extreme position of the evening, but at the time of this article’s writing, it was far ahead of where it was at 8 p.m on Tuesday night.
Global Reverberations
But the effect wasn’t just being felt in the U.S.
Across the world, investors were scrambling in reaction to the shock upset.
Japan’s main index, the Nikkei, turned negative just before 9 p.m. Eastern Time (about 11 a.m. in Tokyo) and ultimately closed down over 5 percent.
Hong Kong’s Hang Seng index was negative at close, shedding about 2 percent of its value — having also turned negative just before 9 p.m. Eastern Time.
Things didn’t look much better in Europe.
France’s CAC 40, a major European index, opened down and was trading down about 2.6 percent at 3:20 a.m. Eastern Time, shortly after it opened. Similarly, the United Kingdom’s FTSE 100 was down as well — over 1.6 percent. Spain’s IBEX 35 was down over 3.4 percent around the same time.
On a conference call that was hosted out of Singapore which ABC News invited to dial-in to, Nomura’s Southeast Asia Equity Strategist Mixo Das, cautioned investors against snapping up cheap stocks “on the dip.”
He warned that too much was uncertain, saying that investors needed clarity on what Trump’s policies will be.
“There’s still a lot of uncertainty about what Donald Trump will do because he hasn’t been talking about what he’ll do,” he said.
Looking Ahead
Flashing red graphics on the televisions and monitors of market watchers are likely to remain over the coming days, analysts said.
“Financial markets will remain very unsettled until there is some clarity about the direction a Trump presidency is taking,” Mark Zandi, chief economist at Moody’s Analytics, told ABC News by email in the wee hours of Wednesday morning. “The uncertainty around economic policy will be a corrosive on the economy until they actually take shape, and then the impact on the economy will depend on the policies themselves.”
Paul Christopher, head global market strategist at the Wells Fargo Investment Institute had a slightly more optimist outlook when he spoke to ABC News by phone shortly after Trump’s victory became clear.
While he said there’s likely “no let up tomorrow and probably the next several days,” in terms of the sell-off, he doubted that it would be “very long-lived, especially the more severe this is at the outset.”
“People will take a step back and see that this is going to be a long game,” Christopher said. “They’re going to realize that a lot of the selling on the night of the 8th and 9th was a lot about traders reversing positions from assuming a Clinton win.”
One thing that became less likely tonight, some analysts said, was the chance that the Federal Reserve would hike interest rates in December.
Zandi said that the result “will ensure that there will be no Fed rate hike this year.”
Christopher was a little more cautious, saying “it look likes — according to the market-driven probabilities — that those odds [of a rate hike] have eased back from about 75 percent to about 50 percent.” He cautioned that this could be an overreaction as well.
In Singapore, Das said that it brought the possibility of a rate hike in December into question, and added that uncertainties over the Fed’s leadership could have a negative effect on markets.
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