What does a Trump victory mean to Global Investment Markets

What does a Trump victory mean to Global Investment Markets

What does a Trump victory mean to Global Investment Markets and why does Gilt Edge think diversification will be key to Investors over the next 12 months?

Twice in 2016 we have seen a major election bamboozle the polls and more importantly global investment markets. What all investors should consider in the forthcoming elections in Europe is that an extra 5% needs to be added onto the polls for the expected loser and taken off from the expected winner. For global investment markets, it seems that investors should do the exact opposite to what markets are indicating leading up to these events.

What can we now expect from investment markets with a Donald Trump Presidency?

 A Trump administration is considered by many to have a good business focus

 Trump’s agenda will provide focus on fiscal stimulus with a large infrastructure plan programme planned

 Trump’s administration is likely to support both the financial and energy sectors. However, for healthcare there will be winners and losers

 The anticipated spending programme will create additional inflation in the medium to long term which will be positive for equities but will lead to rising bond yields

Over the short term, we expect there to be much uncertainty in global markets not just from economic policy in the US but also in areas such as Japan and Europe.

In the US, the major concern is that Trump’s agenda lacked detail and clarity. In areas including trade and security, the rhetoric was polarised from what would be considered as the ‘normal’ Republican position. Trump has often been seen to be at loggerheads with many senior members of the Republican party which, if it continues, will play heavily on market sentiment.

For Japan and Europe, the major concern will be how any agenda will impact on their battle in controlling currency strength, low growth and low Inflation. One of the main areas of attack leading up to the Election was on international trade deals which Trump indicated need to be at least re-negotiated. It has also been the rhetoric surrounding China that is a concern to global markets, with at one stage Trump calling the Chinese ‘just a currency manipulator’. Over the next few weeks it will be very interesting to see the stance taken on current trade deals and how they may be positioned and how relationships develop with both China and Russia.

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