Following the announcement of Donald Trump being voted into The White House, Asian stocks rebounded from Wednesday’s sharp sell-off, however the following day, European share markets seemed to rally.
Investors are shrugging off Trump worries in the hope that the billionaire businessman will introduce a ‘pro-business’ agenda as a catalyst to US economic growth in an effort to blunt concerns about his unexpected victory.
In London, Paris and Frankfurt, primary stock markets opened 1% up. This came after a noticeable rise in Asia, where Nikkei 225 in Japan ascended 6.7%.
Michael McCarthy, strategist at CMC Markets claimed that a consensus was creating a noticeable amount of Trump’s rhetoric, describing it as being more of “a sales pitch rather than a commitment to act.” He added that reactions to Trump’s effect on the market implied that investors had ignored any consequences that would affect international trade and growth prospects, instead focusing on Republican control of both the House of Congress and The White House. This would offer the prospect of reform, kick-starting the US Economy in a dramatic fashion.
Meanwhile in Britain, in the nation’s capital, the Financial Times Stock Exchange 100 index rose by 1% just days after the US Election, regaining the 1% it’d lost just days before. Across the English Channel, Germany and France’s Dax and Cax indexes respectively both found themselves 1.2% ahead.
Following gains on Wall Street, the Nikkei rose by 6.7%, more than recovering any losses from the previous session. Hong Kong’s Hang Seng rose by 1.9%.
Across the currency market, the pound rose by 0.39% against the dollar to a grand total of $1.2455, sitting comfortably above the Euro at €1.1368.
Traders expected Hillary to be the next President of the United States, and the first female President. Donald’s victory caused investors to pump money into stocks deemed to be ‘safer’, as well as assets such as gold. Speaking to the BBC, a strategist at Toyko’s Daiwa Securities, Takuya Takahashi, cited, “Investors were risk averse yesterday, then after seeing that Americans were optimistic and chasing the market higher, they wasted no time reversing their positions. Some of the investors must be thinking that they shouldn’t have sold after all.”
An analyst at City Index claimed that Trump’s desire for the country to unite within his acceptance speech had somewhat helped in the settling of market jitters. Chief Economist Nariman Behravesh of IHS Markit commented, “after the initial shock, investors seem to feel that a Trump administration could be good news for US businesses, with lower taxes and a reduced regulatory burden.” He described how Donald Trump had laid out a number of broad economic policies, which included the renegotiating or cancelling of trade deals and corporate tax breaks, although there was no guarantee that these would go ahead, adding “As in the past, it is unclear how much of the campaign bluster will translate into actual policy initiatives.”