HONG KONG: Markets went into free fall Wednesday and the Mexican peso hit a record low as Donald Trump appeared to be moving into the lead in the race for the White House.
Safe haven assets rallied as investors went running for cover, with the yen and gold rushing higher.
Initial confidence that market favourite Hillary Clinton would win the knife-edge race was wiped out as results showed the firebrand tycoon appeared to be heading for victory in the key state of Florida.
Clinton is considered by many investors to be a safer bet than Trump, who is seen as a loose cannon with policies many fear could wreck the world´s top economy.
“Put your seat belts on because this is going to be a bumpy ride,” Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey told Bloomberg News.
“Investors will be moving in a chaotic fashion to get ahead of the information flow.”
Tokyo collapsed four percent, having been up more than one percent at one point, while Hong fell 3.5 percent and Shanghai sank 1.3 percent.
Sydney gave up 3.4 percent, Seoul shed 3.2 percent and Singapore dived 1.7 percent. Wellington plunged 2.8 percent while there were also losses of more than two percent for Taipei. Jakarta, Manila and Bangkok were all down more than one percent.
Futures on the Dow on Wall Street plunged almost three percent.
– Memories of Brexit –
“It´s quite scary,” Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors, said.
“The slightest move towards Trump moved the market very quickly. The slightest change in the odds is amplifying market moves and this just shows there´s a lot at stake.”
The Mexican peso — which was battered by Trump´s anti-immigrant rhetoric earlier in the campaign — hit a record low against the dollar.
The greenback soared to 20.4572 pesos, above 20 pesos for the first time in its history, up more than 10 percent from its earlier low.
The peso is considered a proxy of Trump´s chances because of his anti-Mexican rhetoric — including his pledge to remove undocumented immigrants, build a border wall and tear up a trade deal.
However the dollar tumbled against the yen as investors rushed into the Japanese unit, which is considered a safe bet in times of uncertainty and turmoil. The greenback was below 102 yen, from above 105 Tuesday.
The euro also rose 1.3 percent against the dollar, while gold soared 2.8 percent to $1,320.30.
“Of course, I can´t say anything definite at the moment, but the market atmosphere reminds me of that five months ago,” Daisuke Karakama, market economist at Mizuho Bank said, referring to Britain´s shock vote to leave the EU.
“Mr Trump has made it clear that he hates a strong dollar, which is a threat” to the floating-rate system, he added.
Oil prices plunged, with WTI sinking four percent and Brent 3.4 percent lower.
– Key figures around 0345 GMT –
Tokyo – Nikkei 225: DOWN 4.1 percent at 16,462.26
Hong Kong – Hang Seng: DOWN 3.5 percent at 22,109.76
Shanghai – Composite: DOWN 1.3 percent at 3,106.23 (break)
Dollar/Mexican peso: UP at 20.4572 from 18.6152 pesos late Tuesday
Pound/dollar: UP at $1.2406 from $1.2378 Tuesday
Euro/pound: UP at 89.30 pence from 89.03 pence
Euro/dollar: UP at $1.1150 from $1.1020
Dollar/yen: DOWN at 101.90 yen from 105.14 yen
Oil – West Texas Intermediate: DOWN $1.85 at $43.13 per barrel
Oil – Brent North Sea: DOWN $1.58 at $44.46 per barrel
New York – Dow: UP 0.4 percent at 18,332.43 (close)
London – FTSE 100: UP 0.5 percent at 6,843.13 (close)