Donald Trump was elected president of the United States on Tuesday and markets across the world quickly reacted. The UK blue-chip FTSE 100 index fell by about 140 points, or 2%, when trading began in London. The Paris market opened 2.9% lower after Donald Trump’s shock win and Germany’s Dax was down 2%.
However, the losses did not continue. Hours into trading the FTSE 100 was almost flat, while Frankfurt and Paris were both down by only 0.6%.
The Mexican peso, which took a nosedive after it became clear Trump was on track to winning the election, recovered some ground against the US dollar. The Mexican Peso is trading down around 8.5% against the US dollar.
Dominic O’Connell, Business Presenter on BBC Radio 4 Today, said:
“Early on the FTSE 100 fell 1.4% but recovered to be down just 0.5% after the first hour’s trading. It was a far cry from the sharp fall the day after the Brexit vote, and mild after the heavy sell-off on Asian markets overnight.”
O’Connell said that part of the reason why traders are so sanguine boils “may be an attempt to second-guess what happened after the European referendum.” Adding that “markets recovered all their lost ground in six weeks, and the FTSE 100 eventually went to an all time-high. Once bitten, twice shy.”
O’Connell attributed the relative calm in the market to confusion.
He said: “The markets know as little about a Trump presidency as anyone else, and trying to seek a safe haven when no-one quite knows the direction of the world’s largest economy is tricky. Better to sit on your hands, and see what happens.”