Advanced Search

Share Coverage



Category: US Elections / Stockmarket / Currency / Futures / Markets

Wall St rallies on 'magnanimous' Trump victory speech

Thursday, 10 Nov 2016 06:11:34 | Rebecca Hyam

After initial falls, traders on Wall Street warmly embraced the Trump win with shares up more than 1 per cent. (Reuters)

US stocks rallied overnight, in a dramatic turnaround from their opening losses fuelled by the upset victory of Republican Donald Trump, as investors bought into sectors perceived as benefiting from the policies of a Trump presidency.

Markets at 8:15am (AEDT):

  • ASX SPI 200 futures +3pc 5,306
  • AUD: 76.53 US cents, 61.54 British pence, 81.02 Japanese yen, 70.1 euro cents, $NZ1.0436
  • US: S&P 500 +1.1pc to 2,163, Dow Jones +1.4pc to 18,589, Nasdaq +1.11pc to 5,251
  • Europe: Euro Stoxx +0.94pc to 327.57, FTSE +1pc to 6,911 DAX +1.56pc to 10,646
  • Commodities: Gold +0.09pc to $US1,276.40/ounce, Brent crude oil +1.22pc $US46.60/barrel, iron ore $US71.00/tonne

Markets oscillated between gains and losses in choppy morning trade but, heading into the latter stages of trading, each of the three major stock indexes were solidly in positive territory in the wake of Mr Trump's win.

Gains of 3 per cent each in the heavily weighted healthcare and financials sectors pushed the indices higher.

Bond proxy sectors such as real estate and utilities, each off more than 2 per cent, were the worst performers.

"When you look at Trump's plans, they are actually pro-market," said Nadia Lovell, US equity strategist at JP Morgan private bank in New York.

"Increased fiscal spending, that's great for infrastructure and defence names, less regulations that help banks, less involvement in healthcare - things that worried the market before."

Mr Trump's plans are reflationary policies, intended to increase economic output by lowering taxes and boosting spending.

A curb on drug pricing was a key campaign theme for Democratic nominee Hillary Clinton, while Mr Trump has called for repealing the Affordable Care Act (popularly known as Obamacare) and loosening restrictions on banks enacted after the financial crisis.

External Link: Perpetual's Matt Sherwood tipped a Trump win and speaks with the ABC's Peter Ryan

Writing in an economic note, IG's chief market strategist Chris Weston said the response to Donald Trump's victory had been breathtaking.

"Right here, right now, traders have viewed the combination of a cut in corporate tax (equating to around 0.5 per cent of GDP), sizeable infrastructure spend (I've seen numbers between $US500 billion to $US2 trillion) and a corporate tax repatriation window providing a massive boost to foreign direct investment," he wrote.

"Throw in trade barriers (such as 45 per cent trade tariffs on Chinese goods) and a move to bring production back to the US and you have a view that prices must increase (inflation) and in turn you have a view that the Fed will have to be more aggressive in tightening policy in 2017.

"Trump will borrow and build and that is what he has done his whole life and it's what he will do a president of the United States."

Through the night, financial markets had reacted violently to the election results, as Mrs Clinton's path to victory narrowed and then vanished.

The S&P futures slid 5 per cent and hit a limit down, meaning the contract could not trade lower, only sideways or up.

Dow Industrial futures briefly fell 800 points.

'Volatile' Trump may yet trigger more market jitters

Chief US economist with global analysts Capital Economics Paul Ashworth said investor sentiment started to turn around after Donald Trump's conciliatory acceptance speech.

"He took a very magnanimous line, he was actually praising Hillary Clinton, and that seemed to have a very reassuring impact on the markets, and instead investors started to think about the possibility of more fiscal stimulus in the US," he said.

Donald Trump takes to the stage to declare victory Video: Donald Trump takes to the stage to declare victory (ABC News)

But Mr Ashworth said one admirable speech could not guarantee the future stability of global financial markets.

"He is apparently a pretty volatile character with a thin skin, so it remains to be seen whether he can keep up that more statesman-like demeanour," he said.

"So it's possible that we'll have some volatility in the days, weeks and months ahead.

"I mean obviously we need to know who will be in Trump's administration - he has very little experience in government - and also, what sort of policies the new Republican Congress together with Donald Trump will pursue.

"We assume we're going to get a fairly modest fiscal stimulus, focused around some tax cuts - I think it's unlikely Trump will get through his much larger package of tax cuts, just because some of the more fiscally conservative Republicans in the House of Representatives in particular won't agree to that."

Audio: Trump election win blindsides investors (Breakfast)

The local share market is set to more than recover yesterday's falls of almost 2 per cent - which got to around 4 per cent at some points yesterday - when trading begins this morning, with the ASX SPI 200 up 3 per cent to 5,306.

At 8:15am AEDT the Australian dollar was worth 76.53 US cents.

West Texas crude oil had risen to $US45.15 a barrel, the price of a barrel of Tapis was also higher at $US45.87 and spot gold had edged slightly higher to $US1,276.40 an ounce.

Today's agenda:

Australia:

  • Home loans -September (11:30am AEDT)
  • Bluescope AGM (10:30am AEDT)
  • Wesfamers AGM (4:00pm AEDT)

New Zealand:

  • RBNZ interest rate decision (7:00am AEDT)

China:

  • New loans - October (TBC)

US:

  • Budget statement - October (12:00am AEDT)

ABC/Reuters

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend