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Australian market recovers from Trump shock

Business

The Australian share market has staged a spectacular turnaround, rising more than three per cent in early trade, after US and Europe markets recovered from early losses following Donald Trump’s presidential election win.

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The benchmark S&P/ASX 200 index was up 3.12 per cent at 1044 AEDT on Wednesday.

IG market strategist Evan Lucas described it as an “extraordinary swing” after local stocks closed 1.9 per cent lower on Wednesday as counting showed Trump edging closer to the White House.

In early Wednesday trade, the market gained more than one per cent as initial vote counts prompted hopes Democrat Hillary Clinton would win.

It was a similar story around the world. Stock markets initially dropped sharply, before rebounding after Trump’s victory, more humble and conciliatory speech.

“Markets turned from predicting economic disaster to optimism about potential for economic reform,” CMC Markets chief market strategist Michael McCarthy said.

“In one of the most extraordinary trading sessions ever, Dow futures went from more than 800 points deficit to close 247 points higher.”

The Dow Jones Industrial Average closed 1.4 per cent higher, while the S&P500 and the Nasdaq each rose 1.11 per cent.

“From a markets perspective, the risks that he was trumpeting up during the primaries and than the presidential campaign are already sort of starting to melt away very quickly,” Mr Lucas said.

Trump’s victory also removes the chance of the US Federal Reserve raising rates in December, which is positive for market liquidity, he said.

Lucas said he expected global markets to remain volatile for a few more days before returning to a more “normal” trading pattern ahead of Trump’s swearing in as president in January.

Locally, materials, energy, health care and financial companies were big winners on Thursday.

BHP Billiton and Rio Tinto were up $1.91, or 8.47 per cent, to $24.47 and $4.14, or 7.6 per cent, to $57.87, respectively.

Energy companies Woodside Petroleum, Santos and Origin Energy were up between three to four per cent.

Within the heavyweight financial sector, Commonwealth Bank, jumped $2.18, or 3.08 per cent, to $73.07.

KEY FACTS:

* At 1044 AEDT, the benchmark S&P/ASX 200 index was up 160.7 points, or 3.12 per cent, at 5,317.3 points.

* The broader All Ordinaries index was up 159.2 points, or 3.04 per cent, at 5,397.5 points.

* The December share price index futures contract was up 150 points at 5,302 points, with 26,246 contracts traded.

* National turnover was 846.3 million securities traded, worth $1.78 billion.

AAP

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