World Markets Dip, Then Rebound After Trump Wins

Despite worries on election night, global markets didn‘t plummet following the news of Donald Trump’s election as United States president.

Dow Jones Industrial Futures were down more than 800 points Tuesday night. However, the Dow closed Wednesday up 256.78 points. The S&P and NASDAQ were also up.

However, investors may be taking a “wait and see” attitude before the newly elected Republican can institute some of his campaign promises.

Charles Jacobs, an associate professor of political science at St. Norbert College in De Pere, said the country’s slow transition of power has a stabilizing effect.

“Until Trump takes control of the White House and starts to work more concretely with Republicans in fleshing out some of the international policy regarding trade, that’s when we might see some issues take a more concrete form,” he said.

Trump has promised to renegotiate NAFTA, or The North American Free Trade Agreement, as well as deals with China, Iran and the Paris accord on climate change. Jacobs said the outcome of those might “have a deeper and long lasting effect on the marketplace.”

When those intentions are made clear, Jacobs said markets could become more volatile. “Even something as ‘small’ as ending some components of Obamacare is going to have an effect on the insurance industry, the banking industry,” he said.

“We’re going to see some reactions to that depending on how they go about repealing that if they’re serious about doing it,” he said.

Jacobs said Trump’s rhetoric about building a wall on the U.S.-Mexico border and renegotiating NAFTA helped drive Mexico’s peso to its lowest value ever Wednesday.

American politics have driven global markets before, Jacobs said, but he noted it is unusual to see foreign markets plunge before a presidential winner has been declared.