In one of the biggest political upsets in recent memory, Donald Trump was named President-elect following the results on November 8. While he will not be inaugurated until early next year, we are already seeing the effects of his campaign in the market. Here we take a look at three popular trading markets and assess the changes that Trump’s future presidency could prompt.
Currency exchange was the first market investors expected to see the influence of Trump’s presidency. Election night is typically a time of volatility for the market anyway, but what we saw last week had even experienced investors scrambling. During the course of the evening, we saw GBP/USD slightly rise before crashing and then surging to new heights as the night went on. As we can see from FxPro, the election also played a huge role in emerging markets, with the Mexican peso plunging to a new low following the shock results.
While in the short-term it’s safe to say that the market will remain volatile, predicting anything further into the future will be more difficult. The Federal Reserve meeting in December should give us our first insight into how the market views the situation. Last year, we saw the Federal Reserve raise interests rate by a quarter of a percent and Chairwoman Janet Yellen recently gave an indication to expect more of the same next month.
Just like with Brexit earlier in the year, economic uncertainty resulted in a significant rise in the number of people looking to invest in precious metals. By the time it emerged that Trump had triumphed over rival candidate Hillary Clinton in the election race, gold had surged to nearly a six-week high of $1,337.40 an ounce. In the following days, the market began to stabilize, especially after Trump’s conciliatory speech in which the Republican candidate appeared to tone down his typically exuberant rhetoric.
Since then, the market has continued to react. The Wall Street Journal reports that gold prices are now at a 5-month low due to the stronger dollar and renewed optimism over potential growth under Trump. Those who rushed to buy have been advised to hold on to their assets for now, though, as the price is expected to rise in the medium-to-long-term as we learn more about Trump’s geopolitical policies.
Of course, Trump himself made his name in real estate so his impact on the market will be interesting to see during his tenure as President. During the course of the election, Trump made big promises to invest heavily in the nation’s infrastructure. On his website, the President-elect notes that he wants to transform America’s “crumbling infrastructure into a golden opportunity for accelerated economic growth” with over $1 trillion of investment over the next decade.
In an industry where optimism and consumer confidence count for almost everything, it is perhaps not surprising that many investors are optimistic about the future. However, others have noted that Trump’s potentially strict immigration policies could be problematic. According to a report by Bloomberg, one in four constructions workers are foreign born and 40% of new home buyers are expected to come from overseas in the next ten years.