It can be argued that the recent electoral campaign was one of the most heated and volatile in recent memory. However, the real shock came when Donald Trump was declared the victor. Not only did this go against many professional mainstream predictions, but some feel that far more than politics alone will be affected. This is the reason why online day traders have been watching the markets very carefully. We have already seen massive swings before and immediately after the results were released. While they did not reflect the doom-and-gloom scenario that some had predicted, there is no doubt that the financial landscape will be changed after president-elect Trump comes into power on 20 January. So, what can we expect (within reason) to occur?
We should first make it a point to note that it would be myopic to attempt to analyse any one stock and predict what may happen. On the contrary, we are likely to see fluctuations within the markets as a whole. It is not unreasonable to assume that indices will fall immediately after Trump is officially sworn in as president. The main areas to watch are likely to be the S&P 500, the DJIA, the CME and the FTSE. The big question is how far these indices will fall and how quickly they are set to rebound. Having made this rather broad observation, are there any specific sectors that may be affected by his policies in the coming year?
Big Business and Banks
These two phrases define Trump and to some extent, his cabinet. Although he promised to “drain the swamp” of abusive corporate policies, the fact of the matter is that Trump is pro-business and pro-bank. Bank stocks may be set for a bullish year and larger corporations (particularly those based out of the United States) could follow a similar route.
While the ultimate verdict is still out in regards to whether or not the dollar will lose momentum against other benchmark currencies, it is plausible to assume that online Forex investors will be moving some of their assets away from the greenback into perceived safe havens until possible knee-jerk reactions fade. So, we should expect to witness a watch-and-wait approach until Trump outlines his domestic fiscal policies in more detail.
International Trade Shockwaves
Currently, the largest concern from an international investment point of view seems to be the abandonment of the “One China” policy. This will have a massive impact upon investment between both nations and in turn, confidence in bilateral trade could wane. This may also cause investors to wonder what other landmark decisions Trump may make.
So, it is clear to see that the first half of 2017 will be quite busy in terms of online trading. Investors will be taking a more rise-averse stance and keeping a close eye on market fundamentals in order to make the best decisions. As always, you can keep abreast of the latest news by following CMC Markets on a daily basis.