Markets steady after Trump shock

Fears that the markets would tumble in the aftermath of Donald Trump’s victory in the US Presidential race have so far not materialised.

Like Brexit earlier in the year, forecasts of economic doom and gloom have proven false.

The BBC’s economics editor, Kamal Ahmed went as far as describing the initial hours after Trump sealed victory as “Brexit Minus”. Investors are in “wait and see mode”.

Developments in the last 24 hours have included:

  • FTSE 100 down 2% before rebounding to finish the day positive
  • Minor falls on other European markets as money flowed to safe haven stocks, gold and currencies including the yen
  • A fall in the value of the US $
  • Sharp rises in pharma and healthcare and some industrial stocks.

Alan Mellor said: “You always expect an initial knee jerk reaction, but the response to the Trump victory was much calmer than was the case following the Brexit vote in June.

“Perhaps Brexit changed the way we view so called ‘seismic’ events of this nature. Markets dislike uncertainty and therefore we can probably expect a certain amount of volatility over the coming days and weeks. But the market will quickly revert to the fundamentals – it is only interested in financial analysis and hard economic facts as opposed to whether we like or dislike Donald Trump as an individual.

“My job as a Chartered Financial Planner is about the long-term planning, helping my clients to invest in the right opportunities, the ones with the best track record and the best future potential.”

Alan added: “Although Trump does not get the keys to the White House until after his inauguration in January, we will hear about his plans for his First 100 Days much sooner than that.

“One policy he is likely to pursue is the repatriation of all profits that have been placed by some of the biggest US corporations elsewhere in the world. This cash pile is likely to spark a period of mergers and acquisitions which will be good for the overall health of the economy.”

Regarding the fall in the value of the $, Alan said: “The US $ is over-valued and has been for some time, so the fall we have seen so far is not such a bad thing.

“We will continue to monitor the impact of the Trump victory very closely and ensure that clients are kept updated with any significant developments affecting their investments. Ultimately, our focus is on the long term, not a single, albeit momentous, event in US history.”

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