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Oil prices tumble as Trump wins US vote

After the initial tailspin, losses narrowed after the president-elect’s conciliatory victory speech

Published: Updated:

Oil prices fell in Asia on Wednesday as Republican candidate Donald Trump defeated Democratic rival and market favorite Hillary Clinton in the race for the White House.

Global financial markets and oil prices went into a tailspin following the billionaire populist’s shock election win but losses narrowed after the president-elect’s conciliatory victory speech.

At around 0830 GMT, the December contract for US benchmark West Texas Intermediate was down 53 cents at $44.45 a barrel and Brent crude for January delivery was 51 cents lower at $45.53.

Both contracts fell more than one dollar earlier in the session after Trump cemented his lead over Clinton.

“Trump’s victory speech was conciliatory,” Jeffrey Halley, a senior market analyst at OANDA, told AFP.

“The market liked what he had to say about fiscal spending to rebuild America’s infrastructure.”

But Halley noted that “the world is still in shock” over Trump’s win and would need more time to digest the potential implications.

“The downward pressure on oil could reassert itself so it’s still too early to gauge any definitive views,” he said.

Crude futures markets tumble

Earlier on Wednesday, oil prices tumbled as vote counting showed Republican Trump edging ahead in an unexpectedly tight US presidential election, setting world markets on edge. Crude futures markets roared into action as Trump surprised by defeating Democrat Hillary Clinton in a series of key contests and opening a path to the White House.

US West Texas Intermediate (WTI) crude futures fell to a session low of $43.07 per barrel, down more than 4 percent from their last close and their lowest since September, before inching back to $43.26 a barrel at 0455 GMT. International Brent crude futures were down 3.3 percent at $44.51 a barrel.

“This is dejavu of the Brexit moment, very worrying,” said Bob Takai, president at Sumitomo Corp Global Research in Tokyo, referring to Britain's surprise vote to leave the European Union in a referendum last June, which led to market turmoil. The falls in oil came as prices for gold, a traditional safe haven for investors in times of high economic risk jumped, while the dollar fell sharply against a basket of other leading currencies.

“Investors moved into complete ‘risk off’ mode... Trump winning would have negative consequences on the price of oil,” said Jameel Ahmad, vice president of market research at trading platform and research firm FXTM. “The threat of growth forecasts being downgraded at least over the short-term due to investor uncertainty in theory weakens demand for commodities like oil.”

Elsewhere, a report by the American Petroleum Institute (API) showed crude inventory figures rising by 4.4 million barrel was also weighing on markets.

Asian stocks tumble

Financial markets went on a wild ride Wednesday, as Wall Street index futures and Asian stock benchmarks tumbled on the rising possibility of a Trump presidency. Shares had been higher early in Asia’s Wednesday trading session but then turned sharply as investors unloaded shares when Donald Trump first gained the lead in the electoral vote count.

A Trump presidency is seen likely to bring added uncertainty on various issues, including trade policies. Pricing in a possible Trump victory, Dow futures were down 3.8 percent or 687 points at 17,593.00 and S&P futures had dropped 4.6 percent to 2,037.80. Oil and the dollar tumbled, the Mexican peso sank and gold surged as investors sought a safe haven.

As of 11:30 EST (0430 GMT), Trump had taken 216 electoral votes to Hillary Clinton’s 197. In Asian trading, Japan’s Nikkei 225 index plunged 4.2 percent to 16,458.75 and Hong Kong’s Hang Seng slumped 2.8 percent to 22,262.74. South Korea’s Kospi shed 2.7 percent to 1,949.07, the Shanghai Composite index fell 1.3 percent to 3,106.23 and Australia’s S&P ASX/200 in sank 1.7 percent to 5,167.00.

Benchmarks in Taiwan, Singapore, the Philippines and Indonesia also lost ground. “A Trump victory would be certain to surprise markets and generate a global uncertainty shock,” Societe Generale economists Klaus Baader and Michala Marcussen said in a research report. Trump was locked in tight races across a handful of key battleground states with polls beginning to close across the nation. In early results, Trump the Republican and Clinton the Democrat scored in their expected strongholds.

By about 9:30 pm Eastern Standard Time (0230 GMT) the count showed Donald Trump with 137 electoral votes to Clinton’s 104. “Rightly or wrongly, markets are going to be concerned about a Trump victory, particularly given the potential consequences for world trade and its impact on many large companies in the US stock market,” said Ric Spooner, chief analyst at CMC Markets in Sydney.

“Like Brexit, the rally over the last two days increases the downside potential if Donald Trump does win the election,” he added, referring to Britain’s unexpected vote to leave the European Union that shook world markets. The price of gold, seen as a safe place for investors’ money in times of uncertainty, soared 3.1 percent to $1,313.50 an ounce. The election uncertainty also jolted currency markets, sending investors fleeing from the dollar. The greenback plunged 3.0 percent to 101.79 yen from 105.46 earlier in the day. The euro rose to $1.1228 from $1.1020. The exception was the Mexican peso, which swooned 10.7 percent to 20.31 pesos to the dollar.

Trump has threatened to renegotiate the North American Free Trade Agreement and vows to build a wall along the United States’ southern border and force Mexico to pay for it. Financial analyst Gabriela Siller of Banco BASE issued a forecast earlier Tuesday that a victory by Donald Trump could cause the rate to fall to 24 to the dollar next year and lead to a 3 percent economic contraction in Mexico.

Energy markets were also roiled. Benchmark US crude futures lost $1.35, or 3 percent, to $43.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to close at $44.98 a barrel on Thursday. Brent crude, used to price international oils, slid $1.11, or 2.3 percent, to $44.93 a barrel in London.