Published: Sat, November 12, 2016
Economy | By Melissa Porter

Mexican stocks, peso take a beating following Trump victory

He has repeatedly said he wants a wall built to keep illegal Mexican immigrants out of the United States and has threatened to tear up a North American trade agreement.

"He has focused on and promised faster economic growth, and he now has a Congress that can deliver on some of the key elements of his strategy for that", said Douglas Holtz-Eakin, president of the American Action Forum and who helped advise Sen. Against a basket of currencies, the dollar recovered from its Wednesday trough of 95.885 to reach 98.602, a gain of 0.8 percent on the day. The euro declined sharply against the dollar on Wednesday as the dollar rebounded after investors digested Donald Trump's surprise win in the USA presidential election.

Oil prices recovered with Brent crude up 0.8 per cent at $46.40 a barrel and USA crude up 0.9 per cent to $45.39.

In other Asian trading, South Korea's Kospi advanced 2.3 percent to 2,002.60 and Hong Kong's Hang Seng added 1.9 percent to 22,839.11. The greenback dropped to 0.9548 against the swissy, the lowest since August 19.

During his campaign, Trump vowed to rewrite or scrap the North American Free Trade Agreement on grounds that it favoured Mexico at the expense of United States workers.

In addition to the Trump battering, the currency has also suffered from concern about how rising USA interest rates will lure money away from Mexico, financial struggles at the state-run oil giant, the government's growing debt burden and warnings from credit-rating companies that it could get downgraded. "Donald Trump is not a person of institutions".

The euro fell to $1.0865, its lowest against the greenback since October 25 (EUR=). It broke below key chart resistance at 77 USA cents, after comfortably staying above that level for 3 straight days.

In Europe, Germany's DAX was up 0.5 percent at 10,697, the CAC-40 in France rose 0.6 percent to 4,572 and Britain's FTSE 100 was 0.1 percent lower at 6,904.

However, a reassuring victory speech - followed by calls from Clinton and President Barack Obama to get behind Trump - provided some encouragement to traders.

On Wall Street, the Dow Jones ended the day up by 1.4% at 18,589.69.

Mexico's peso sank sharply on Thursday in its biggest two-day loss in 22 years as investors anxious about how U.S. President-elect Donald Trump's policies could hit exports from Latin America's No. 2 economy.

BONDS: The sell-off in bonds continued, sending bond prices lower and kicking up the yield on the 10-year Treasury note to 2.12 per cent from 2.06 per cent late Wednesday.

But Renault shares reversed 3.6 percent after a government inquiry into emissions cheating entered a new stage, possibly opening the door to criminal proceedings against the carmaker.

The dollar has been fairly solid since Trump's victory.

Oil prices stabilized. Benchmark U.S. crude futures edged up 2 cents to $45.29 a barrel in electronic trading on the New York Mercantile Exchange. The Nasdaq composite index slipped 27 points, or 0.5 per cent, to 5,223.

The peso tumbled for a second day Thursday, sinking 3 percent to 20.4503 per dollar at 9:26 NY.

U.S. December gold futures settled down 0.1 percent at $1,273.50, with volume surging above 785,000 contracts, the highest for the most-active contract on records going back to 1980.

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