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Markets mostly recover after early Trump panic

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The prospect of a Trump presidency jolted markets around the world Wednesday. (AP Photo/Ahn Young-joon)

Markets clawed back most of the losses seen overnight as traders reacted to Donald Trump's surprise victory, and almost all of the dive in stock futures was reversed before U.S. stock markets opened.

Although markets demonstrated significant volatility, the odds of a worst-case scenario of a fallout more dire than the Brexit reaction appeared to have diminished. The Dow Jones Industrial Average opened the day slightly up, after tumbling as much as 750 points, or well over 4 percent, overnight.

Many global equities markets followed a similar pattern. Steep losses in the Japanese Nikkei 225 index were significantly pared back by the start of the business day in the U.S.

10-year U.S. Treasury securities, which had gained as Trump's victory became apparent and investors sought safe assets, declined Wednesday morning.

Part of the reversal represented investors coming to grips with the shock of Trump's unanticipated victory.

Some analysts also said that Trump's conciliatory late-night acceptance speech in New York calmed markets.

"If you get the Trump we saw at 2:30 this morning, which is a very gracious, a very unifying Trump, then yields will go higher," said Allianz chief economic adviser Mohamed El-Erian on Bloomberg, referencing U.S. Treasury securities. "But the equity market will remain relatively calm."

Of particular note was the Mexican peso, which had suffered a historic decline against the dollar as votes were counted and it became clear that Trump would win. After falling nearly 14 percent, the peso began the day down under 10 percent — still a major decline.