Vote counting so far has Trump ahead of Democrat Hillary Clinton and moving closer to the required 270 electoral votes in order to claim the White House.
Global markets also fell, with stocks down in Tokyo, weakness in European share prices, and gold benefiting from a flight to safety.
STORY: Trump's surprise wins in key U.S. states rattle world markets
State-by-state U.S. Electoral College results
FACTBOX-Democrats gain one U.S. Senate seat so far, Republicans hold House
COMMENTS:
BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, MENOMONEE FALLS, WISCONSIN:
"It's kind of a shock-and-awe type response, both because it creates all sorts of unknowns as to not only what sorts of policies will be implemented, but what timetable they will be implemented.
"Markets are doing a textbook risk off move here because of all that uncertainty. A lot of people are fearful about what it could mean not only for U.S. growth but global growth if Trump makes good on his promise to impose tariffs on Mexican goods and Chinese goods, triggering a trade war.
"The surprise election result also I think is going to cast a cloud globally because we can't put a lot of faith in polling data anymore, so people might assume the worst outcomes for the Italian referendum and for the German and French elections.
"This isn't going to be just a drop-down and bounce-back sort of scenario. Because of these unknowns, this risk off mood could persist well into 2017. Right now, I'm expecting that we could see something of the magnitude of a 10 percent pullback in the S&P 500, and in the worst case something closer to 20 percent."
KIT JUCKES, GLOBAL STRATEGIST, SOCIETE GENERALE, LONDON:
"Away from the initial reaction to Trump winning (if that eventually materializes) the fact that the Republicans appear set to control both houses in Congress will help get conservative policies through. Not good for international trade, but potentially pointing towards lower tax rates and possibly, an easier overall fiscal stance if it’s hard to get spending cuts through as an offset.
"More than an FX issue, that throws out questions about the bull steepening in U.S. Treasuries. A Trump presidency is not obviously supportive for the Treasury market in anything other than a first reaction. That matters to FX markets because the first reaction is a combination of lower yields in the U.S. and risk aversion globally. If we get higher U.S. yields in due course, that will limit downside in dollar/yen (I still doubt we’ll see a sustained break below 100), but it increases downside risks for AUD. NZD and CAD, all very sensitive to U.S. yields."
MICHAEL PURVES, CHIEF GLOBAL STRATEGIST AND HEAD OF DERIVATIVES RESEARCH, WEEDEN & CO.:
"I think you are going to get some big up and down moves in all these different asset classes, and generally people are going to really want to de-risk. Equities will get sold for some time, the dollar will be weaker against most key currencies and emerging markets currencies, bonds, equities are going to be under pressure for some time.
"But keep in mind Trump is an unusual candidate. He’s campaigned on three sort of core pillars: immigration, trade barriers and helping manufacturing get restored. He hasn’t really articulated a clear plan and he is a volatile messenger. You don’t know whether he is going to carry through with that and what his relationship with the Republican establishment will be like in Congress.
"Assuming he wins, that’s going to be a very interesting dynamic. I don’t think we are going to get a 'Brexit' type of reaction where the markets got crushed and then ripped higher. I don’t think we will get that this time around."
DAVID KOTOK, CHAIRMAN AND CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, FLORIDA:
"Anything anyone says about what a Trump presidency will be is making an assertion, an opinion, but doesn’t have a factual grounding. The man has never held public office. He has a reputation and he has a business reputation and it is very controversial. But he has never held public office. We don’t know a lot about him. And the fact is that if the U.S. is willing to elect someone about whom we don’t know a lot as president, that reflects on the weakness of the candidate of the other party.
"Six months down the road I think that the U.S. economy is recovering, 75 pct of U.S. companies have reported positive earnings surprises and neither one of these folks alter that as president. But today that doesn’t count."
DANIEL ALPERT, MANAGING PARTNER, WESTWOOD CAPITAL LLC, NEW YORK:
"In short, whatever the outcome, this is a horribly angry electorate. Horribly. We did it to them. We, the educated who knew better. Centrists who refused to rise up. We did this. We didn't lead. (President Barack) Obama, ultimately, did not fulfil the hope and trust for real change. Bernie's insurgency proved that. Indeed I supported her, from the moment (Senator) Bernie (Sanders) could not make it and maxed out in primaries. She is qualified and smart, but she did not connect with the essential dissatisfaction that Bernie was able to identify.
"The markets will tank and then, those around Trump who have reasonable minds will script him with some pablum for the markets and calm them. But that is not the issue. The issue is that he cannot fulfil the goals of those who are in his crazy inner circle and, at the same time, truly address the interests of those who have risen up against the Washington consensus.”
ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES, TOLEDO, OHIO:
(If Trump wins) "I think because of the uncertainty and the shock value of what happened, you could see a drop over the short term of a few weeks, and if the drop gets too severe there’s going to be a great buying opportunity. If you look at the long-term perspective, some of the platform he is most strict on implementing, like corporate tax cuts, will help earnings per share."
Lancz said the S&P 500 could fall 5 to 8 percent in the next few days if Trump wins. Sectors such as healthcare and financials, which have had a rocky performance this year, would be appealing if they get knocked down with the broader market, Lancz said.
DONALD SELKIN, CHIEF MARKET STRATEGIST, NATIONAL SECURITIES, NEW YORK:
(On the spike in VIX futures): "VIX futures are this point are assuming he’s going win. It was no surprise that if he wins this was going to happen. ... With Brexit we had one bad day but this is different. This is what’s scary about putting the most powerful position in the world in the hands of a man who many believe is temperamentally unstable.
"His tax cuts could open up a huge increase in the budget deficit and his trade sanctions could interrupt world trade. This could put us in a recession."
BUCKY HELLWIG, SENIOR VICE PRESIDENT, BB&T WEALTH MANAGEMENT, BIRMINGHAM, ALABAMA:
"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.
"A Trump win could put the FOMC on hold in December – beneficial for stocks and bonds.
"The consensus of the investment community was that Clinton was going to win. Positions will have to be shifted if she does not win, and we are seeing the start of that with the futures selloff tonight."
MARKET REACTION:
STOCKS: U.S. stock index futures opened modestly higher but turned sharply lower as Trump took a lead in electoral votes. The S&P 500 e-mini futures traded down 4.5 percent at 00:45 EST/05:45 GMT. Dow futures traded down 717 points.
US STOCKS - Futures tumble as Trump opens path to White House.BONDS: U.S. Treasury futures prices opened slightly lower, but turned sharply higher, up 0.95 percent.
US TREASURIES - U.S. bonds rally as stock futures plunge
FOREX: The dollar fell 3.57 percent against the yen, while the greenback climbed more than 13 percent against the Mexican peso. The euro rises more than 1.5 percent against the U.S. dollar to a 1-month high.
FOREX - Dollar tanks as Trump takes lead in fiercely fought U.S. election
SPOT GOLD: Spot gold prices rise 3.9 percent to $1,325.60 an ounce.
Tuesday's trading synopsis:
Ahead of the U.S. election results, U.S. stocks finished Tuesday marginally higher. After starting the session at a slight loss, the Dow Jones industrial average <.DJI> ended up 0.4 percent at 18,332.43 points and the S&P 500 <.SPX> gained 0.38 percent to 2,139.53 points. The Nasdaq Composite <.IXIC> added 0.53 percent to 5,193.49 points.
Benchmark 10-year U.S. Treasuries closed on Tuesday down 8/32 of a point in price, driving the yield, which moves in the opposite direction, up to 1.858 percent from Monday's closing yield of 1.828 percent.
The U.S. dollar traded higher in the late New York session on Tuesday, with gains against the safe-haven yen and Swiss franc. The Mexican peso and Canadian dollar rose against the greenback as investors bet ahead of election results that Clinton would win the election.
U.S. gold futures
(Reuters Global Economics and Markets Reporters; +1-646 223-6300; Editing by Daniel Bases and Jonathan Oatis)
