Donald Trump victory fears sees Nikkei plummet as markets react to Republican's gains in election

The Mexican peso plunged to a record low as international markets responded nervously to the increasing prospect of Donald Trump becoming the next US president.

Share prices in Asia and Australia gave up nearly all their earlier gains as the race for the White House tightened.

The Nikkei 225 in Japan had shown a 200 point rise but by 2.40am was in negative territory, down by more than 260 points.

Much of the action was in currencies where the Mexican peso has become a touchstone for sentiment on the election, as Trump's trade policies are seen as damaging to Mexico's export-heavy economy.

The peso plunged throughout the night,falling more than 10 per cent against the US dollar per cent as a result of uncertainty over the result in Florida.

Meanwhile the dollar tumbled versus the yen euro and swiss franc.

Neil Wilson at ETX Capital described "chaos" beginning to set in as the likelihood of Florida choosing the Republican candidate grew, prompting investors to take shelter.

"There was a major sell-off in stocks while havens like the yen and gold are soaring as the Sunshine States gives Trump a very good chance at the White House. Dow futures are down more than 450 points and USD/JPY is trading at just above 102.

"Mexico's peso is getting whacked and has plunged to close to 20 against the dollar - down nearly 10% from its high earlier this morning. The proxy trade is speaking loud and clear at the moment.

"This is huge - there is now a very real prospect that Trump will win and so markets are repricing everything. Our election index is now just giving Trump the nod over Clinton - an incredible turnaround.

"But it's not over and we can expect massive volatility here on in until we get results from all the states. Pennsylvania and Ohio still vital for the final result and these are still too close to call.

"Trump is in the lead in Ohio at the moment, but this could change. Virginia and Michigan are also key.

"This could yet be a massive overreaction by markets as it's not a done deal by any means. If Clinton claims it from here there will be a huge rally in the markets."

Australia’s benchmark All Ordinaries also moved into the red as both markets appeared to be tracking CNN’s coverage of the election with Donald Trump casting a dark pall over both markets which appeared to track sentiment towards him falling as it rose.

The US election has started to resemble Brexit, with early expectations shattering as the evening moved on.

"This is truly a historic moment. I don't recall such an extreme outlook on the US economy that could be so negative to the Mexican economy," said Benito Berber, an analyst at Nomura in New York.

"You have to go back to when the United States took half of Mexico's territory" to find such a moment when U.S. politics had such a potential impact on Mexico, he added

Sporting Index reports spread betting punters have been selling Clinton all night.

At 2.14am it forecast 288 votes for Hilary Clinton in the electoral college that picks the president, still a victory but a narrow one with all the momentum favouring Mr Trump.

It had been as high as 330 votes.

Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors, told Agence France-Presse:

"It’s quite scary. The slightest move towards Trump moved the market very quickly. The slightest change in the odds is amplifying market moves and this just shows there’s a lot at stake."