The spectre of Donald Trump as president terrorised the financial world as the election panned out on global TV screens Wednesday.

A day later, sentiments reversed and markets recorded one of the greatest turnarounds in history.

Australian shares soared, with the market gaining $58 billion in value, its biggest one-day rise in five years.

The All Ordinaries Index climbed 3.2 per cent, or 170.6 points, to 5408.9. That more than cancelled out Wednesday’s dramatic collapse of 2.4 per cent as news of the Trump ascendancy emerged.

Share investors made up with Donald Trump.

The mining sector was a standout, with iron ore shooting to its highest level since January last year. That pushed BHP Billiton up a massive 8.2 per cent, closely followed by Rio Tinto, up 8.2 per cent and Fortescue Metals, up 10.7 per cent.

The big four banks jumped, with Westpac up nearly 4 per cent to $30.82 and the other three majors rising more than 3 per cent. Woolworths and JB Hi-Fi were up more than 2 per cent, and Telstra gained 1 per cent.

The only losers were gold miners, which fell as panic lifted and gold prices dropped.

Overseas markets also recovered. Share futures had fallen overnight in US time as the vote was counted. But with the result clear when trade began again the broader US S&P 500 index was up 1.11 per cent.

Markets can overshoot by a long way as a result of what look like extreme events. But the then often revert to a calmer truth. We saw that with Brexit,” said Dr Alex Joiner, chief economist with IFM Investors

In Asia the Trump factor was also a positive with Japan’s Nikkei index rocketing 6.92 per cent after falling five per cent the day before. The UK market rose 1 per cent while in Germany and France shares were up 1.56 per cent and 1.49 per cent.

Even the Aussie dollar was back in fashion, making up more than half a US cent to US76.73c and was a little stronger against the euro. The gold price, which had spiked in the previous day’s panic, fell 3.8 per cent to $US1,286 an ounce.

So what’s going on?

In part its punters getting caught out, said Julia Lee, senior analyst with Bell Direct. “The bounce is partly driven by short sellers having to come back into the market and buy back to cover their positions,” she told The New Daily.

The punters got it wrong, says Julia Lee.

That means they sold shares they didn’t have on Wednesday, thinking the market would fall further and they could buy them back cheaper on Thursday.

It looks like they did their dough, as so many followed that strategy they pushed the market back up again when they went to buy.

Urbis chief economist Nicki Hutley says the rally was also partly triggered by relief that Mr Trump’s victory speech took a far more conciliatory tone than he had during the campaign.

However, the effects of his economic policies are still unknown. “We’ll have to wait to see what his economic policies actually mean and how they’ll be accepted by the Republican party,” Ms Hutley said.

Watch how the Republicans react, says Nicki Hutley.

“His pledges to rebuild America are a positive idea that could support growth, but he will have funding problems as Republicans may not like big debt and deficit plans,” she said.

Other plans could have negative effects. “His anti-globalism policies like hiking tariffs against China and potentially withdrawing from NAFTA (North American Free Trade agreement) would be a negative for growth,” Dr Joiner said.