The recent presidential election ended up with the dramatic victory of the Donald trump since a large group of people was preferring Ms. Clinton. Despite the anti-social and strict behavioral issue of Donald trump Ms. Clinton was the leading candidate which dramatically ended up as Trump won the final the final battle. The global stock market was in fear of the event of the presidential election since Mr. Trump triumph was most likely to cause catastrophic disaster in the stock market. But surprisingly Wall Street reaction was extremely positive after Mr. Trump became the 45th U.S president. The market even managed to close with a strong gain of 1.4 even though the investors was in fear. However, in the eyes of trained economic experts, the global economy might face extreme uncertainty in the near term future due to the dramatic win of Donald Trump. Let’s have a close look at the major price index of the stock market.
Due to the dramatic win of Mr. Trump, the biggest corporate winners were oil companies, private prison operators, and the pharmaceutical companies. Due to strict regulations imposed by Ms. Clinton, all of these companies were a financial barrier which has been eased to great extent on Mr. Trump victory. The currency market also reacted violently to the announcement of new 45th U.S president. The green bucks hit a fresh high overcoming the loss of the last four month against the Japanese yen. The Mexican peso dropped sharply near about 13% before it finally got stabilized at 8.7% at 19.91 pesos to the U.S dollar.
The leading economist in the world was forced to cut their forecast for H1 2017 US GDP growth by 0.5 %, nearly losing their hard grip in the global market. There has been also a sharp rise in the 10 – year Treasury yield which exceeded more than 2% , the highest level since January 2016.On last Wednesday opening, the FTSE 100 fell by 2% ,however, it strongly recovered its losses in the financial market and closed more than 60 points up before the end of the day. The Japanese stock market was also down by 5.4% and along with the Hong Kong’s sang which fell by 2.2%.To be precise the investors in the stock market had a bumpy ride in last week due to the event of the presidential elections.
There has been a prevailing statement in the trader’s world that money and powers collide every four in the Wall Street and Pennsylvania Avenue. The effect of power transfer has always been a massive blow in the stock market and the professional traders always make decent amount profit out the major political event. The behavior of the stock market has always been unpredictable as U.S history suggests during the presidential election. The stock market has a tendency to recede during the four-year election cycle for the last 182 years. The first two one or two years tends to be fantastic for the Dow Jones investors since price literally rallies at that time. But with the course of time, the bullish sentiment tends to fade away from the financial market and the bears start to take control of the market to balance the global economy. For instance, the Dow Jones rallied near about 27% in the first year of president Obamas second term and 7,5 % in year two. So, according to statistics the last year was supposed to be strongest business cycle but surprisingly the Dow industrial dropped by 2%.Considering the last three year data the leading economic researchers are not certain about near-term performance of the stock market since stocks tend to behave in a dramatic manner which often ignores the fundamental fact and goes in favor of the market sentiment.
There remains a great deal of confusion in the investors’ world regarding the Democrat and Republic party. But in reality it the stock market merely considers this fact since portfolio doesn’t matter for winning the white house. If we go through the previous history of the stock market then we will see that the Democrats are slightly better for the stock market than the Republican. The Dow Jones were by 9% annually in an average in the reign of the Democrat whereas it went down to 6% per year during the republican administration. But according to Chief investment strategist at Blackrock, Russ Koesterich says that the behavior of the stock market is totally unpredictable regardless of the result.
Summary: Many economic researchers believe that election result shouldn’t be concerned for the stock traders since its result has created many different types of variation in the price movement of the stock market. If the stock market is up for the first three months during after the presidential election then no can guarantee a bullish move for the next three months. Even the next three months can be catastrophic disasters in the stock market which will wash away all the initial gain in the market. So in the eyes of trained professional fx trading, the financial instrument can be extremely difficult right after the result of the presidential election. But the extreme volatility created in the event of the major political event can also benefit the stock traders significantly provided that the traders have a strong understanding of the market sentiment.
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