The election of Donald Trump as the next USA president was a surprise to markets given the positive polling in favour of Hillary Clinton. This was a similar case to Brexit.
Markets initially reacted negatively with the US future’s market down 2%, the dollar weaker and emerging markets weakening. The All Share index opened more than a percent down and the Rand slumped to 13.75 to the dollar. But the markets recovered quickly. The US market ended 1.1% up, the US dollar strengthened, our market was positive and the Rand recovered to 13.45 to the dollar.
The Trump shock election is more of a wake up call to the US government that the average American is suffering and desperate, which is largely a consequence of middle household income declining in real terms over the last ten years. Questions are always being raised about the true strength of the US economy in relation to interest rate hikes. Here is another indicator showing that the economy is in need of more growth stimulus.
In an article from Old Mutual they summarise the Trump election effect on markets and conclude that the effects of a Trump presidency are too soon to tell. This will initially mean more uncertainty, but the silver lining is Republican control should be proactive in boosting the economy through much needed infrastructure spend and lower taxes. Click here to read the article: Shock Political Event – Trump Sweeps the US Election
