President-Elect Trump Market Expectations

So Donald Trump will be the next President of the United States and to the surprise of many, the markets currently don’t look worse for it.  In fact, the markets have mostly recovered since its knee-jerk sell off as the election results unfolded.

 

As well, in the days since the election, Trump appears to have softened his stance on some of his more controversial policies relating to immigration, free trade and the abolishment of Obama’s Affordable Care Act.

 

This moderate side of Trump could be a good thing for global share markets.

 

For instance, Trump has reaffirmed his interest in spending US$1 trillion on infrastructure. Should he follow through on this, the United States will have to look outside its borders for iron ore resources. This is seemingly good news for Australia’s mining companies whose minerals go into the making of steel.

 

Trump is also seen as favouring Big Business with plans to lower corporate tax rates, US bank stocks have rallied since the election results were announced.

 

However, it’s not all blue sky thinking, the Trump regime may attempt to protect the employment prospects of US workers by implementing trade tariffs, particularly against larger trading partners such as China.   This would likely create issues for global trade; and Australia, as a mass exporter to both the US and China, could feel the pinch if Trump pursues this agenda.

 

Even if Trump continues to act in the interests of the anti-establishment in the beginning of his Presidential term, it’s likely that the checks and balances provided by the US Congress will force Trump to take a friendlier approach in the long-run and we’ll hopefully end up better for it.

 

Whether you’re a fan of Donald Trump or not, it appears markets have settled down in the short term as investors’ reactions turn from shock to ‘at least we know’.   We expect things to remain volatile as we learn more about President Trump and his likely policy agenda.

 

As with any good investment strategy, regularly reviewing the suitability of your investments is important.  We’ll continue to monitor the situation for our clients and advise them accordingly

 

 

***Featured image from: Logan, Jason, and Carl Richards. “Sea of Uncertainty.” The New York Times. The New York Times, 12 Nov. 2016. Web. 16 Nov. 2016. <http://www.nytimes.com/interactive/2016/11/13/your-money/wealth-cartoon.html?src=me>.

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