Despite forecasts that were reported by most polls, which almost unanimously gave the lead to Hillary Clinton, Donald Trump has, it seems, become the 45th president of the United States. Even the first rumors of the republican candidates’ possible victory began causing panic on on the financial markets – both American and internationally. After it became completely clear, that Trump has decisively won, this led to a serious stress in the financial space.
The fact that his victory became a surprise to traders and most of Americans is obvious even through the leading American tabloids. The first analytical forecasts which attempted to clear the confusion after Donald Trump’s victory began appearing on the websites of US media outlets after the close of the New York Session. Despite the US banking and financial sectors showing first signs of recovery, American brokers and financial experts still do not expect anything good to from Trump’s victory.
Wall Street on the other hand is in complete shock, even more so. Traditionally, Wall Street figures have a relatively bad relationship with Donald Trump, and the president-elect doesn’t enjoy a lot of popularity there, mildly put. One of the leading traders (he preferred to remain anonymous in the media) of the American financial giant, Goldman Sachs said in his interview for RFI, that Donald Trump, despite his business past and experience, is quite distanced from the US financial sector. He added that he doesn’t know “a single person in his Wall Street office that would openly support Trump during the months leading to the election”. He also said that many at Wall Street expect market volatility and a period of instability with Donald Trump’s ascension to the presidential seat.
Another Wall Street representative – 35 year old banker from Mexico, Jesus, also said in his interview to RFI that Hillary Clinton would have been preferable to traders as the US president, despite that most Democratic Party nominees tend to conduct very strict policies as the Head of the State. “Donald Trump has a very bad reputation on Wall Street” – Jesus stated, “Everyone still remember how went bankrupt here. It is difficult to find banks on Wall Street that would be willing to deal with Donald Trump”.
Due to the fact that, during his campaign run Trump promised drastic changes in the trading, taxation and regulation spheres, investors received him cautiously. With Donald Trump’s emergence, American analysts expected a steep decline in prices on most financial markets – and investors to move strongly into “safe havens” such as gold and metals. And, judging by the first reaction to Trump’s victory which was expressed across most financial media, they were correct in their negative forecasts. Instruments that typically rise in price during periods of instability have been trending bullish, as well as gold and bonds. However, the Dollar pairs are already showing signs of stabilization, despite the free-fall that it experienced under speculation in the first hours after the US election concluded.
The stress that the stock market experienced over the past days, is commonly compared to the situation that followed the UK Brexit vote. The only difference that is perceived between the two is in terms of time, which may be required for the brokers and traders to return to normal operations. This time, the situation is projected to normalize faster – the stocks market should only need a couple days to get back to it’s senses. All of the consequences of Trump’s victory should become clear by the end of this week.