Financial markets roiled in the aftermath of Trump election victory

10 November, 2016

The surprising triumph of Donald Trump in the 2016 Presidential Elections became the primary sensation of the year. Financial markets and political experts have been rating Trump behind Clinton throughout the race, but seemed to have missed the main thing – they scrutinised Trump from their own view, without realizing how wide the gap in “rational thinking” was for the Americans that Trump was appealing to. Popular yearnings of a thorough overhaul of social and economic reforms have compelled Americans to give Trump a try, as his proposals simply promised more changes. Being carried away with populistic promises, the American nation decided to go in Trump’s leading strings, although feeling unsure about their choice.

The victory of the Republican candidate has revealed important details about the nation’s sentiments – the feeling that business and political elite has left them alone, treating them as a cheap workforce, while continuing to get rich at their own expense, until somebody was going to put an end to it. Clinton has been trying to appeal to rationality and sober thinking, advocating gradual reforms, while Trump was proposing a “shock therapy”, which became a breath of fresh air for the nation, still slowly shrugging off after the 2008 crisis.

The FBI probe into Clinton’s use of a private email for government work, also helped Trump to narrow lagging polls and even pull ahead, after resuming 11 days before the election day. Although there were no critical violations discovered, it has certainly slashed some part of the electorate from Clinton or even helped those who were not determined to make their decision yet.
On the flip side, a recording of Trump speaking obscenely about his relationships with women failed to retain his reputation solid, as he publicly apologised.

Now that the elections have passed, it became clear that the key to Trump’s win was his ability to “burst the abscess”, which has been inflating for a long time due to the many social and economic problems. He has been better at figuring out the real needs of the nation, telling them what they wanted to hear and painting a better picture of their future.

Nevertheless, financial markets are now on the cusp of sweeping changes and there is a lot of work needed for investors to manage this new reality, which came as a surprise to many.
The best indicator of soaring anxiety after Trump’s election were the safe heavens. Gold surged 3.3% to $1,330, while the Japanese Yen soared to 101 level against the US Dollar. Both benchmarks of investors fear retreated, with Gold futures trading at $1,302, while USDJPY at 103.79.

The US Dollar index tumbled to 96.0, although managed to recover quickly, trading near Tuesday’s close at the time of writing. Equities plunged on the election result, but quickly erased losses, signalling that the route on fear was a good opportunity for entry signalling and for an upbeat mood in general. Russian RTS soared 2.12%, while the Russian Ruble strengthened 0.80% anticipating a tightening of relations between Russia and the US.

Oil prices demonstrated the same pattern with the US Dollar as traders fled, but later returned with prices moving into green territory, WTI +0.11%, Brent +0.35%. The Australian Dollar traded 1 percent lower against the US Dollar, failing to fully pare decline due to a rout in commodities.

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