Donald Trump will be the next President of the United States of America. There is no changing that. After the Brexit vote, another “black swan” hit the markets. However, according to Natixis, the investors were not prepared for this because despite the significant blows suffered by some markets in the morning after the Election Day (some equity indices, such as the Nikkei, have lost nearly 5%) and the initial shift of investors to safe haven assets (Swiss franc, yen, gold), there was a noticeable rebound from the lows within a few hours. By the late morning, major European equity indices were down around 1% from the levels seen the night before (above the levels the markets closed at on Friday, November 4th), and the S&P 500 futures markets were down around 1.7%.
According to Nuno Teixeira, Head of Institutional & Retail Solutions in Investment and Client Solutions Investment Division at Natixis, in line with the protectionist policies Trump has advocated, some emerging assets (notably the Mexican market) are due to suffer more significant drawdowns. This is due to the prospects of a slowdown in global trade, while on Wall Street some very global companies could be somewhat affected. But the subdued reaction of equity markets seems to have taken into account the relatively moderate speech Donald Trump made after his election was confirmed.
Stocks: Trump promised to “invest hugely” (to double what Hillary Clinton pledged) in infrastructure, which may result in a positive outcome for stocks linked to this sector. Also, he is keener on carbon and oil as a source of energy, so “clean energy” firms could suffer damages. Trump’s policies will favour internal products and damage imports, namely China’s.
Obligations: Trump’s victory might stop the Fed from raising the interest rates on December.
Values: in the early morning the dollar lost some of its value (as a consequence of a drop in Treasury rates and a possible change shortly Fed movements). In the following hours, the US currency regained some of the losses, due to the uncertainty of Trump’s future politics and his view of globalisation. Since not all the analysts agree on his concept of “de-globalisation”, one can only wait and see what happens next.
Gold: no surprises here. Due to Trump’s victory (and the supposed instability that will follow it and considering a weak dollar), gold jumped to $1.300 per ounce with the possibility of going to $1.400 per ounce as was the case in 2014.
Other issues: while one does know that President-Elect Trump has a mandate for a change, it remains to be seen how effective he will be in governing and implementing his proposed policies.