Market’s “Muted” Reaction To Trump’s Election
Data suggests Trump’s surprise victory may have less of an impact on the market than initially feared.
The F.T.S.E. 100 saw an initial negative reaction to the news of Donald Trump winning the U.S. election matching that of Japan’s Nikkei, the two falling 2% and 5% respectively. There is however a feeling among some that the market has learnt lessons from its knee-jerk reaction to ‘Brexit’. Hargreaves Lansdown’s senior analyst, Laith Khalaf states that the “initial stock market reaction to the Trump victory was a short intake of breath, followed by a shrug”.
The news, although a shock has been received in a more “muted” fashion according to Mr Khalaf who points out that despite an “early morning sell-off,” the F.T.S.E. 100 then “staged a recovery to trade a little under yesterday’s closing price, with the F.T.S.E. 250 actually bouncing back into positive territory.”
A common theme between the events was that ‘experts’ failed to predict the results. Markets are seemingly growing used to political uncertainty. Managing director of IBOSS Ltd Chris Metcalfe believes “there is no point in us forecasting what happens next, people way smarter than us have just called another election completely wrong and as for economist forecasts, well you just have to look at the hopeless calls on the U.K. post-‘Brexit’”.
Short Term Impact
There is still room for short term profit making off the back of market uncertainty. Those that invested in gold for example have seen a $20 rise in the price of 1 ounce up to $1,300. Longer term the election of Donald Trump is receiving more positive sentiment from Mr Metcalfe saying “that once the dust has settled Trump is not necessarily bad for asset markets”.
It took a few weeks for the F.T.S.E. 100 to recover ‘Brexit’ losses. Mr Khalaf’s view is that the market has become better at factoring in political surprises.
Paul Hoskin
THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL