US, global stocks and dollar jump after Trump shock

New York - Mexican peso falls.

Wall Street stocks rallied on Wednesday after a dramatic overnight sell-off, while bond yields jumped on inflation expectations and the Mexican peso was battered as investors reacted to Donald Trump's surprise win in the US presidential election.
While equity investors' election night panic turned to daytime jubilation, bond investors worried Trump's protectionist policies would ultimately weaken the dollar and hike inflation.
US 30-year Treasury bond yields gained almost 25 basis points in their sharpest rise in more than five years.
Benchmark US 10-year note yields also advanced, climbing 21 basis points to their highest since January in their biggest increase in more than three years.
The US dollar rose across the board and hit its highest against the Japanese yen in nearly four months. It gained support from the equity turnaround and the yield spreads, said Kathy Lien, managing director at BK Asset Management in New York.
Mexican Peso
The Mexican peso recouped some losses after falling to a record low. The currency has been vulnerable to Trump's threats to rip up a free trade agreement with Mexico and to tax money sent home by migrants to pay for building a border wall.
The three major US stock indexes rose as investors piled into financial and healthcare stocks on hopes of weaker regulation than was expected from a Hillary Clinton presidency.
"The fact the Republicans control all three branches of government made a lot of people think that some of Trump's ideas that were pro-business - lower taxes and lower regulation - could actually be passed," Rick Meckler, president of investment firm Liberty View Capital Management in Jersey City, New Jersey.
Goldman Sachs chief investment officer Sharmin Mossavar-Rahmani advised private wealth clients to "stay the course" on expectations for a large stimulus that would boost investments.
Investors also recalled that global stocks' dramatic decline after Britain voted in June to leave the European Union was short-lived and was ultimately seen as a buying opportunity.
The MSCI world stock index plunged as much 7.2 percent in the two trading sessions after the June 23 Brexit vote before rising 8.8 percent in the following 12 days. The index, which was flat on Wednesday, was 8.6 percent higher than the post Brexit low.
But many money managers said they expect volatility in the coming weeks as the world awaits January's inauguration for more concrete clues of what a Trump presidency means.
"Trump doesn't have a history in government that people can look back at," said Meckler. "Whatever he has to say in the coming weeks will have an oversized effect on the market."
The Dow Jones industrial average closed up 256.95 points, or 1.4 percent, to 18,589.69, the S&P 500 had gained 23.7 points, or 1.11 percent, to 2,163.26 and the Nasdaq Composite added 57.58 points, or 1.11 percent, to 5,251.07.
Standard & Poor's is affirming the United States' credit rating following Donald Trump's election win.
The rating stands one notch below S&P's top "AAA" grade, which the U.S. lost in 2011 after a standoff in Congress over whether to raise America's borrowing limit.
S&P says the outlook for its "AA+" rating on U.S. debt remains stable. It says the country's strong economy and government institutions offset its high level of debt and any uncertainty about what kind of economic polices Trump's administration will pursue.
Japan
Japan's share benchmark the Nikkei 225 index jumped 6 percent in early trading in Tokyo. The rebound followed a rollercoaster day Wednesday as shares cratered after it became apparent that Donald Trump won the presidential election.
Currency markets also recovered with the U.S. dollar trading at 105.60 yen, up from about 101 yen per dollar at its lowest on Wednesday.
Japanese share prices tend to rise when the dollar gains against the yen since a large share of corporate profits come from overseas. A weak yen means bigger profits when those earnings are brought back to Japan.
Toyota Motor Corp. jumped 5.3 percent and Sony Corp.'s shares rose 5.2 percent in early trading. European stocks have closed higher after markets recovered from early losses in the wake of Donald Trump's victory in the U.S. presidential elections.
Europe
Germany's DAX ended the day 1.6 percent higher at 10,646.01 while Britain's FTSE 100 gained 1 percent to 6,911.84. France's CAC 40 rose 1.5 percent to 4,543.48. All the indexes were lower earlier in the day.
Russia
Russia's main share index closed up 2.2 percent, leading emerging markets, amid speculation that Donald Trump's election as U.S. president could spell an eventual end to sanctions imposed over the Ukraine crisis.
The Micex index's leaders included several state-owned companies, with gas giant Gazprom up 4.5 percent and energy generator RusHydro up 3.5 percent.
Sanctions have restricted Russian companies' access to capital markets and ability to work with US entities. The Russian ruble fluctuated during the day, and was down 0.4 percent at 64 per dollar by Wednesday evening.
UNCERTAINTY
Trump's victory speech pledge that he would forge strong relations with other big nations helped ease some concerns about heavy tariffs being slapped on imports to the United States and a starkly more aggressive geopolitical attitude.
But emerging markets bore the brunt of the Republican nominee's victory, with Mexico's peso still down 8.2 percent after falling more than 13 percent to hit a record low overnight.
LibertyView's Meckler said he would be surprised if Asian stocks don't bounce back Thursday. MSCI's broadest index of Asia-Pacific stocks outside Japan ended down 2.3 percent Wednesday while Tokyo's Nikkei fell 5.4 percent.
In commodity markets, safe-haven gold sharply pulled back initial gains and were essentially flat at $1,275 an ounce after climbing as much as 4.9 percent to $1,337.40.
Oil prices recovered along with US equities, with Brent crude up 0.96 percent at $46.47 a barrel and US crude rising 0.6 percent to $45.27.