Futures markets and oil prices cratered and gold climbed overnight Tuesday as election results pointed to a widening path to victory for Donald Trump. Prediction markets swung in the Republican nominee's favor as well.
Networks projected a Trump victory in battleground states Florida, Ohio, North Carolina, Iowa and Georgia, while California, Virginia, North Carolina and New Mexico broke for Clinton. America remains on edge late into the evening as Pennsylvania, Michigan, Nevada, Utah, New Hampshire and Wisconsin are still too close to call.
"Global markets are being shaken up -- you can hear early alarm bells ringing," said Nigel Green of deVere Group financial consultancy. "This should be expected, as markets tend to have knee-jerk reactions to these kind of situations. ... Trump represents uncertainty -- which markets hate -- and [markets] had all but priced in a Clinton victory."
Futures markets plunged approaching midnight Eastern Time. The Dow plummeted nearly 800 points, the S&P 100 points, and the NASDAQ over 240 points. Gold soared 4.6% to more than $1,300 per ounce. In currencies, the dollar fell 3.7% against the yen, and the peso plunged more than 13%. Oil fell 3.7%.
Most major Asian stock-market indices were also lower. Japan's Nikkei 225 was down 5.3%, while Hong Kong's Hang Seng index lost 2.8%.
According to one estimate, global equity markets could tumble by as much as 15% if Trump wins the White House.
Prediction markets, which for months have been pointing heavily to a Clinton victory, swung in Trump's favor as well. U.S.-based prediction market PredictIt now gives Trump about 97% odds at winning the White House. Earlier in the day, he was at less than 30% odds. PredictWise, which aggregates data from prediction markets and other sources, now has Trump with an 95% chance at victory and Clinton's odds at just 19%.
Republicans Marco Rubio, Todd Young, Rob Portman, Chuck Grassley, Richard Burr and John McCain are projected to win their Senate races in Florida, Indiana, Ohio, Iowa, North Carolina and Arizona, respectively. Democrats Tammy Duckworth, Michael Bennet and Kamala Harris won in Illinois, Colorado and California. Republican Senator Ron Johnson scored a surprising victory against Democrat Russ Feingold in Wisconsin. CNN has also projected Republicans will retain a majority in the House of Representatives.
Election Day came with a few glitches.
A Nevada judge rejected a request from Trump for records from a Las Vegas polling place that his camp said allowed constituents to vote after the deadline last week. The real estate magnate had filed a lawsuit claiming election officials violated state law by allowing voters to join a line at a polling location after 8:00 p.m. State law says voters who are in line when the polls close must be allowed to vote.
Colorado's voting registration system went down Tuesday afternoon but after a half an hour was back up and running. The state's Democratic Party filed a motion in court seeking a voting extension until 9:00 p.m., claiming the state's voting system might have been the target of "external system intrusions." A judge ruled the polls would close at 7:00 p.m. as planned.
Clinton appeared to have a clear lead in the days heading into the election, with RealClearPolitics average of polls giving her a more than three-point edge. Nate Silver's FiveThirtyEight had her with a 71.4% chance of winning, bringing up upward of 300 Electoral College votes. Prediction markets in the United States and the United Kingdom give the former secretary of state a clear edge as well.
Markets rallied for a second straight day Tuesday. The S&P 500 climbed 0.38%, the Dow Jones Industrial Average added 0.40% and the Nasdaq rallied 0.53%. The S&P 500 has risen nearly 3% over the past two days, due in large part to increased confidence in a Clinton victory among investors.
Jack Mohr, TheStreet's chief investment strategist, said the global market selloff "aligns with the shock and uncertainty related to a 180-degree reversal from what [investors] had previously priced in as certainties -- a Clinton win and a divided House of Representatives, with many even arguing that a complete Democratic sweep was on the table.
"What we are seeing -- potential Trump victory and a Republican [legislative] sweep, rips apart the relative calm the market enjoyed heading into tonight. The market hates uncertainty and reacts violently to shock."
Still, Mohr and Jim Cramer, who co-manage Action Alerts PLUS as a charitable trust, cautioned in a note to subscribers ahead of the election not to make any knee-jerk trades around the voting.
"Empirical evidence suggests you are more likely to make money on a coin flip than any attempt to trade around electoral uncertainty," they wrote, noting that global markets' short-lived crash following Britain's June Brexit vote shows why players should avoid rash moves.
"Investors who blew out in panic were left hung to dry as the markets made up for the 7% sell-off within a week's time," Cramer and Mohr wrote. "Whether or not the extended rally was deserved remains unknown, but the takeaway is clear -- long-term investors hummed their way through the carnage while short-term traders got burned." (To read the rest of Cramer and Mohr's note, click here for a free 14-day trial subscription to Action Alerts PLUS.)