Donald Trump made history last night by being elected the 45th President of the United States and stock markets all around the globe saw some vigorous movements last night due to the unexpected result. This manifested in great volatility in the market throughout the world with epic gains and losses recorded. The DOW, S&P, gold and US dollar were all affected while election poll results started coming in and now that the verdict is clear and a good time has passed in the market, here is how the market stands after 48 hours and two full days of trading:
President-elect Trump’s comment on illegal immigrants and his tough immigration policy gave the Mexican economy and currency a battering. The peso started to fall from the very moment the polls closed and it fell to an all time record low overnight after Trump became President-elect Trump. The currency slid more than 12% against the dollar as investors began to wonder what would happen to Mexico’s autos, oil and other exports, most of which it sends north to the United States. In early trading on Wednesday, the peso had trimmed its loss to less than 8%. New York Times gave out the numbers and mentioned that the key reason for this was that traders and investors were not ready for this or did not predict this coming which in-turn contributed greatly to Peso’s sudden decline.
Source: Call Levels
There seemed to be a lot of activity when it came to the forex market as we saw a range of prices Call Levels users set for EURUSD (Eurodollar) over the span of 3 days. The red dots are zones of Interest where many users set Call Levels before & after the presidential polls were called. While most of our users were setting call levels around 1.11, many reacted to the dollar’s volatility around Election Night and as soon as Donald Trump was elected President, we saw vast downside levels being set around 1.09! Though there were users who predicted more downside on the dollar, the surge in Gold prices backed the dollar and the U.S. markets.
Source: Call Levels
Our Call Levels users seemed to have a good estimate of prices as most of them seemed to expect the surge in Gold prices and set their levels accordingly. Even though there were varied price levels set between $1250 – $1400, majority of Call Levels users users seemed to have set their levels between $1300 – $1350 where Gold traded at the end of the day. Gold started trading at $1280 as soon as Election Night results started being reported and currently is trading at $1330 (at the time of writing), so users seem to have got their Levels on point!
Coming back to America, Wall Street reacted positively to Donald Trump’s victory, despite it sparking panic on global markets earlier in the day. But experts warned that the US, and global economy faces a very uncertain future. On election night, Dow had dropped as much as 800 points, but was quick to recover as the Dow Jones industrial index flirted with record territory, shooting up 257 points, or 1.4%, to close at 18,589. The Standard & Poor’s 500 index rose 24 points, or 1.1%, to 2,163. The Nasdaq composite added 58 points, or 1.1%, to 5,258. Gold also glittered during the early-trading process and prices surged today from $1,280 to $1,337 per ounce.
Trump, ever since the very beginning of his campaign had talked about an urgent need in improving infrastructure as well as healthcare and had even mentioned a possibility of privatising medical care from private institutions. This worked out very well for various companies as the biggest corporate winners were private prison operators, oil companies and pharmaceutical companies as shown in the chart below. Pfizer (world’s largest drug company) soared 8%. Ariad Pharmaceuticals Inc jumped 23.5% while Ionis Pharmaceuticals Inc was up 21.87%. Suppliers of raw materials and machinery also did well, buoyed by Mr Trump’s plans to invest heavily in US infrastructure projects. Caterpillar Inc was up 7.72% while United States Steel Corp jumped 17.17%. Here is a chart of the top 10 companies that had the best gains, the majority of which are oil and private prison companies:
On the Forex markets, the dollar reversed earlier selling against the Japanese yen and reached a high of 105.87 yen, highest since July. It had fallen down by 4% in overnight trading. The dollar also rallied against the Swiss Franc and touched its highest peak since November. Euro fell ti $1.092 which is its lowest in a month and the Canadian Dollar also dropped to it’s lowest in the past 6 months, but was quick to recover in later trading though it remained 0.6% lower.
Having a closer look at the world market, FTSE fell 2% upon opening on Wednesday, but it made its recovery as it ended the day with more than 60 points up. France’s Cac index and Germany’s Dax both closed about 1.5% higher after erasing losses of more than 2%. Asian markets, that saw a rather deep fall as soon as the results came in bounced back pretty quick. Japan’s Nikkei 225 index plunged by 6.7%, which was way more than recovering losses from the previous session. Hong Kong’s Hang Seng index added 2.2% with Australia’s ASX index up 3.2%. But, in spite of the current gains, Bloomberg predicted that there might be various risks especially to Southeast Asia if President-elect Donald Trump follows through with imposing trade barriers and tighter immigration controls. Here is a list of countries that might be most at risk:
Trump seems to have been successful in terms of overturning analyst predictions, with today’s reality being on the rather positive side. Even though it is way too early to talk about how the future economic plan would be set up, Trump has said that the American economy will grow by 5-6% a year, yet no economist or analyst thinks it has the capacity at the moment to do more than 2%. There were a flurry of messages that came flying over the president-elect’s way, but Moscow saw a morning of happiness and hope as the Russian President also sent his good wishes to Donald Trump.
Now, as we get used to the fact that Donald Trump will take over the White House in January, the committee he puts together will no doubt get busy trying to put his policies into effect. In the meantime, there are a couple of things that can go down in the next few days. There is also major uncertainty if Janet Yellen, the Fed chair will resign or hold her seat as many predict that even her days are numbered looking at Trump’s economical outlook on cutting down the tax-rate. The question of what tomorrow holds still remains uncertain and the biggest question is, are the investors still ready to brace volatility?