Donald Trump wins the election: so what next?
International investors are still stunned by a scenario that looked unfeasible before yesterday: Donald Trump will be the next President of the United States of America.
As is often the case for this type of event, investors tend to underestimate the risks in the run-up to the event, and then blow the consequences out of proportion once it has actually happened. However, despite the significant blows suffered by some markets this morning (some equity indices, such as the Nikkei, have lost nearly 5%) and the initial shift of investors to safe heaven assets (Swiss franc, yen, gold), one can already notice a meaningful rebound from the lows and one has not witnessed a major flight to quality. By the time we are writing these comments (11:00am CET), major European equity indices are down around 1% from last night’s levels (above the levels of markets’ close on Friday 4th November) and S&P500 futures markets are down around 1.7%. In line with the protectionist policies Trump has advocated, some emerging assets (notably the Mexican market) are due to suffer more important drawdowns, due to the prospects of a slowdown in global trade while in Wall Street, some very global companies could be somewhat affected. But the subdued reaction of equity markets seems to take into account the relatively moderate and consensual speech which Donald Trump has made, after his election was confirmed.