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Historic, unprecedented, and survivable

It was a historic victory alright, just not the one most people expected. No glass ceiling was shattered on Tuesday night, and yet the world did not end on Wednesday morning. And nor did the markets collapse. Sure enough, the Budapest Stock Exchange opened 0.7% down from its Tuesday close, and within minutes was 1.2% down, but by noon it had clawed most of that back and was at 0.4% down. That hardly seemed to live up to the Washington Post assertion that, in the realization that Donald J. Trump would be the 45th President of the United States of America “global investors reacted as if the world had caught fire”.

Some markets fared better than other. Asia, still open as the news came in, had taken a battering by the time its markets closed on Wednesday morning. The Mexican peso, perhaps not surprisingly, plunged 7.86% against the dollar, falling to a historic low. Gold, the traditional safe haven, saw prices rise. So did oil. The yen and the Swiss Franc gathered in strength.

Europe’s traders, like pretty much everyone else, seemed to have accepted that the race would be close, but expected that Secretary Hillary Clinton would ultimately triumph. That was a scenario they felt comfortable with. She was a known quantity; Trump, who will become the first President with no experience of either holding public office or as a military leader, is her polar opposite. The markets largely followed a similar pattern: opening falls, some sharp, before a gradual claw back during the day. Franceʼs Cac index and Germanyʼs Dax had heavy falls at the start of trading, London’s FTSE 100 index fell 2%; by the end of the day, all were positive.

Even on the other side of the Atlantic, it had initially been predicted that the Dow and the S&P 500 would open about 1.5% lower, with the Nasdaq off by 1.9%. At the time of writing this, the S&P 500 was down 0.4% at 2,129 points, the Nasdaq down 0.7% at 5,156, and the Dow Jones 0.1% lower at 18,312.

It seems as if the markets everywhere took time to adjust to the news; they were shocked initially, but then came back, and much quicker than they did after the U.K. Brexit vote. Perhaps that, in some way, paved the way for Wednesday’s reaction. The markets did not get their preferred candidate, of course, and there must certainly be question marks over what a Trump presidency will mean for trade, but the markets will get on with their business, as there is nothing else they can do.

Trump does bring some degree of certainty, with the Republican party now holding all three branches of the government with control of both the House of Representatives and the Senate. He will not face the gridlock that made life so difficult for much of President Barack Obama’s time in office.

More than anything, though, Tuesday’s vote changes nothing immediately. Trump does not become president until January. It seems that, for now, at least, most are taking a wait and see approach.