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Donald Trump wins US election; international financial markets reacted impulsively

9 November 2016
Economics&Markets
energynomics

Donald Trump is the next president of the US after a long, bitter and divisive election campaign. New York businessman and former reality TV star clinches victory over Hillary Clinton, perceived as a typical representative of the political and economical establishment. The Republican nominee shattered expectations on Tuesday with an election night victory that revealed deep anti-establishment anger among American voters and set the world on a journey into the political unknown.

International financial markets reacted impulsively to the announcement on Donald Trump’s victory in the US presidential election, commented Ovidiu Dumitrescu, Deputy Director General Tradeville. “In a scenario similar to that which followed Brexit’s vote, we expect that this reaction to occur only in the short term, and equity markets to recover later. An argument for this being a short time reaction from the investors is evolution of the Dow Jones Industrial Average, which, after a 800 points drop, recovered half the loss.”

On the other hand, continues Dumitrescu, there are chances for the US dollar to depreciate further against the euro. An additional pressure is being generated by the likelihood that the Federal Reserve will not increase the reference interest rate at the December meeting.

Romanian market also reflected the investors risk aversion in the opening of today’s trading session with a 2% fall of BET, which was partially recovered by midday. The yield on government securities in lei increased to a maximum of 3.23% per annum for 10-year maturity, given that they are considered risky assets by foreign investors. However, it is possible that the government securities market to recover in the short term, if investors encouraged by a cautious Federal Reserve will decide to take risks again. Romanian Leu is expected to remain in its regular range against the euro and to appreciate against the US dollar.

In his analysis, Ovidiu Dumitrescu also refers the international markets, where gold could be a notable exception – “it should move positively in a new context, which could be marked by economic protectionism and anti-immigration politicies, which would negatively affect growth global economic, economic trade, investment and financial markets”.

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