The Financial Markets React to Donald Trump’s Election

10th November 2016

Investment Manager David Battersby examines the financial markets’ reaction to Donald Trump’s election.

Donald Trump will be the next President of the United States.

A man with no Political or Military experience, who ran on a ticket of fixing a broken system tapping into a largely blue collar workforce who have a desire for change as jobs have moved offshore.

Markets have taken the news badly with the US$ falling, the Mexican Peso collapsing whilst we have seen a flight to safety with Gold and the Japanese Yen rising. Meanwhile Emerging markets have come back 2.5% and the Japanese Nikkei 225 has fallen over 900 points or 5.4%

The outlook for the US is a potential recession if he does as he promised and break up free trade agreements but in his acceptance speech he spoke of treating other nations fairly and on Hilary Clinton, who he had promised to lock up, he said the nation owed her a debt of gratitude.

This raises questions on various election promises, such as Building a Wall, removing Obamacare, Deporting Illegal immigrants, dismantling NATO and relationships with Russia. If he reigns back on too many policy promises he is going to look foolish.

Whilst he has talked about making America great again referring to investment in Infrastructure, an area that is lacking in the US, there is a funding gap of US$1.4tn and funding such will add hugely to debt funding which will become more costly as the dollar falls and interest rates rise, something that has triggered recession in the past. However for every US$1bn invested in infrastructure, some 21,671 jobs are created.

Whilst he has promised to make America great again he has been short on detail providing uncertainty which markets do not like.

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and the value of investments can fall as well as rise. No representation is made that the stated results will be replicated.