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Australia, NZ: Shares soar as markets do surprise u-turn after Trump win

Thursday, November 10, 2016 - 09:49

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[BENGALURU] Australian shares soared three per cent in early trade on Thursday, the biggest one-day jump in five years, after Wall Street surprisingly rose on Donald Trump's victory in a bitter US presidential election.

The S&P/ASX 200 index ricocheted 2.95 per cent or 152.144 points, to 5,308.700 by 1205 GMT after a tumultous day on Wednesday where it ended 1.9 per cent lower, in its biggest fall since the Brexit vote in June. New Zealand stocks also rebounded.

Despite months of warnings that a Trump White House would create uncertainty, US investors embraced Mr Trump's victory and his plans to rebuild American infrastructure and pledge to double US economic growth.

"It is quite clear that the markets had a rethink on the economic impact of the Republican presidency in the US," said Michael McCarthy chief market strategist at CMC Markets.

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Market voices on:

"Anything that stimulates the US economy is likely to affect industrial commodities and given the still historically low level of prices in industrial metals like copper and energy markets, the potential is for increased economic growth to flow through to industrial commodities."

Copper surged to a 15-month high on Wednesday, dragging other metals along, on investor speculation that the Trump presidency will boost demand for metals.

Jeffrey Gundlach, chief executive of DoubleLine Capital, said the Wall Street rebound was based on the investor belief that the Republican President-elect's policies are better for economic growth in the short-term than Mrs Clinton's would have been.

The CBOE Volatility index fell 23 per cent and was on track for its biggest daily drop since late June.

Miners swept gains in the benchmark index, on track for its biggest percentage gain since Oct 2011.

Shares of mining giants, BHP Billition and Rio Tinto Ltd soared as much as 9.84 per cent and 9.36 per cent respectively, their highest intra-day gain in over seven years.

Financial stocks also rallied, with the "Big 4" banks gaining around 3 per cent with Westpac Banking Corp taking the lead at 3.7 per cent. S&P ASX 200 Financials Index rose 3.7 per cent, copying the US financial market.

Bucking the trend, gold stocks took a beating as safe-haven stocks were not pursued after Mr Trump struck a conciliatory tone in his victory speech. The ASX All Ordinaries Gold Index plunged 6 per cent.

New Zealand's benchmark S&P/NZX 50 index was up 179.570 points, or 2.68 per cent, at 6,843.350 as of 1009 GMT.

The index showed its biggest intra-day gain since Jan 2012, helped by a decision by the Central Bank to cut its interest rate to a record low of 1.75 per cent.

Healthcare stocks and Industrial stocks dominated the market where Fisher and Paykel Health Corporation climbed 5 per cent and Auckland International Airport rose 1.5 per cent.

REUTERS

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