donald trump has proved markets wrong. ill-positioned for the startling outcome, investors now have to sort out a tectonic shift in american politics flat-footed. the first reaction will be a heavy dose of mayhem as markets digest the shock. u.s. stocks seem poised to drop sharply wednesday, with stock futures falling sharply in tuesday night trading. the dollar fell in asian trading, with the japanese yen and the euro rallying more than 2% as results came in for mr. trump. mr. trump<u+2019>s performance sends a glaring signal. half the u.s. electorate has rejected the status quo of policy making and global economic order. the global consensus toward more unfettered trade is surely behind us, as foreshadowed by the u.k.<u+2019>s vote to exit the european union. a trade war with china and mexico may not materialize, but a more insular looking america would surely hurt companies that sell abroad, such as boeing and intel, and those that produce abroad but sell in the u.s., such as apple. domestic companies, such as media and telecom stocks like verizon and comcast, would appear more insulated. companies like pharmaceuticals, seen as exposed to a hillary clinton presidency, could be buoyed by mr. trump<u+2019>s win. a trump win raises massive questions on how the world<u+2019>s largest economy will be managed. an expected rate increase next month comes into question if the federal reserve is unnerved by the market<u+2019>s reaction. meanwhile, the longer-term management of the fed is up in the air should mr. trump win. janet yellen <u+2019>s term expires in january 2018, and mr. trump has promised to replace her. some will dismiss the trump win as a brexit redux and the market reaction as a short-term blip. that take dismisses the real effects brexit still holds for the u.k. economy as it is worked out. but more importantly, the u.k. economy is just 3.5% of the world<u+2019>s. the u.s. is a quarter of the world<u+2019>s. its currency underpins the global monetary system. a clinton win would have likely represented continuity for investors: a left-leaning democrat facing at least a partially republican congress. but mr. trump isn<u+2019>t just another republican president with a predictable pro-business collection of policies. he supports maintaining entitlements and dismantling the free-trade consensus that has ruled u.s. economic policy for a generation. his relationship with a republican-controlled congress, many of whose members opposed him, will determine how much of his agenda, from building a wall with mexico to slashing tax rates, is passed. his way of thinking will be a powerful force in the republican party and in politics generally. the election is ending, but the uncertainty for investors may have only begun. write to alex frangos at alex.frangos@wsj.com
trump<u+2019>s surprise ends election, begins uncertainty for markets - wsj
alex frangos