US Election Futures tumble as Trump opens path to White House

The S&P futures slid 5 percent and hit a limit down, meaning the contract could not trade lower.

U.S. stock index futures crashed in the overnight session into Wednesday as a market that had been expecting a victory by Democrat Hillary Clinton scrambled to adjust bets as Republican Donald Trump looked increasingly likely to win the White House.

Trump clinched victories in the key battleground states of Florida, North Carolina and Ohio, and he and Clinton remained in close battles in Michigan and Wisconsin, states that had been expected to land in Clinton's column.

With results in a mere handful of states still unknown, Trump had a lead in votes in the Electoral College, and Clinton's path to the presidency was looking increasingly difficult.

Financial markets reacted violently. The S&P futures slid 5 percent and hit a limit down, meaning the contract could not trade lower, only sideways or up. Dow Industrials futures briefly fell 800 points.

"It's kind of a shock-and-awe type response," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

An eventual Trump victory "creates all sorts of unknowns" not only in terms of which policies will be implemented but also their timing, he said.

Republicans were expected by major TV networks to maintain their six-year control over the U.S. House of Representatives, and were also on track to defend their Senate majority, although the Senate majority narrowed.

Wall Street is traditionally seen as preferring gridlock, or shared control of the White House and Congress, than a sweep of both Congress houses and the Presidency.

At 00:52 a.m. EST (0552 GMT) S&P 500 e-minis were down 99.75 points, or 4.67 percent, with 1,367,937 contracts changing hands. Nasdaq 100 e-minis were down 241.5 points, or 5.03 percent, in volume of 165,897 contracts, and Dow e-minis were down 717 points, or 3.92 percent, with 223,784 contracts changing hands.

CBOE Volatility index futures shot nearly 40 percent higher, reflecting investors' reservations over a Trump presidency.

The Mexican peso slumped versus the U.S. dollar to a historic low above 20 per dollar. The peso was last down more than 12 percent against the greenback.

The sharp moves in various financial assets are reminiscent of the reaction to Britain's vote in June to leave the European Union, known as Brexit, which markets misread. S&P e-minis fell 5.7 percent over the next two sessions after the vote, but the decline proved a buying opportunity as futures regained their pre-Brexit level within 10 sessions.

"If the selloff in stocks carries through tomorrow and a few days after (assuming a Trump win), it could provide a buying opportunity similar to post-Brexit market action," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

While stocks fell, traditional safe havens like gold and U.S. Treasuries rose as investors avoided risk. The U.S. dollar index tumbled 1.8 percent.