Republican Donald Trump has suddenly become the 45th US president.
Financial markets were taken by surprise, as they expected victory of Hillary Clinton.
Stock markets are heading downwards, and the currency strengthened against the dollar.
Analysts try to predict what the outcome of this election will mean for the world’s stock and currency markets.
HSBC: This election outcome could be a turning point for the US
Chief economist of the bank, Kevin Logan, notes that Trump’s presidency will entail changes in the federal fiscal policy, tax cuts, deficit growth, restrictions on trade and international capital flows and the reduction of the labor force, if the president will carry out his plans for deportation.
The head of HSBC Currency Strategy division, Daragh Maher, argues that the market reaction to Trump’s victory will continue for some time, since his presidency may be a turning point for the country.
“The effect on the currency of such an unexpected outcome of the elections will depend on the fact whether Trump fulfills his campaign promises, which the markets will have to take into account. Apart from the rhetoric of the new president, support of the Congress, dominated by Republicans, will also play important role”, – he continues.
In general, this outcome of the elections will be a turning point for the foreign exchange market, along with gold.
Short-term price dynamics will be determined by the decline of readiness for risk, increased volatility and uncertainty. Medium-term effects will depend on the pace and extent of Trump’s policy implementation by administration.
Deutsche Bank: Barriers to globalization are expected
Jim Reid, strategist at Deutsche Bank, says that the victory of Trump will have negative impact on the assets in the short term but in the medium term, the chances of increasing budget expenditures grow, while globalization will face obstacles, as well as trade and migration flows.
“We should expect the weakening of risky assets and decrease in bond yields, which is then restored, when the markets digest such election result. Reflationary policies, at some point, could benefit the stock market, however, we must not forget about the growth of volatility”, – he continues.
“The global economy has been in want of a shake-up for a long time, but if Trump is really a suitable candidate for this, time will tell”, – concludes Reid.
Fidelity: Post-war order basics are at risk
Dominic Rossi, director of Fidelity International Investment, is sure that unprecedented political risks jeopardizing the pillars of the world’s way of life after the Second World War are to be expected.
“This unexpected turn of events requires a sober assessment of risks. The Fed is to feel the first effect, since the probability of a rate hike in December, which was to be followed by two more in 2017, has declined substantially. The dollar, which strengthened in anticipation of higher interest rates, made a reversal. Monetary policy will remain accommodative. Risks to the “bullish” market went into decline”, – continued Rossi.
“However, this time financial risks are replaced by political ones. We can only wonder, whether Trump fulfills his protectionist campaign promises. Investors, particularly foreign ones, will take a wait-and-see position”, – he concludes.