The ViewMarkets have not given Trump a free pass – far from it
Up until now Trump has done little to damage sentiment, but that does not mean investors are giving the president the thumbs-up
For a highly unpredictable and impulsive United States president who has threatened nuclear war and flouted nearly every political and diplomatic convention, Donald Trump has not done too badly in the eyes of financial investors.
In the run-up to his unexpected victory in the presidential election a year ago last Tuesday, the vast majority of asset managers were convinced that a Trump win would trigger a sharp and disorderly sell-off. The real estate tycoon’s nationalist and protectionist economic agenda was thought to pose a serious threat to emerging markets, in particular China.
Yet the prediction of a “shock to financial markets”, “tightening [in] financial conditions” and “a significant slowdown in US [and] global growth” made by Citigroup less than three months before the election (several other global investment banks had equally bleak views about a Trump presidency) proved to be wide of the mark.
From a market perspective, Trump has reasons to celebrate.
The best thing that can be said about Trump’s victory is that it has not proved to be the financial calamity which many predicted
The benchmark S&P 500 equity index has surged nearly 20 per cent since the election, the third-strongest rally in the first year of a modern US presidency, according to data from Bloomberg. More strikingly, the Vix Index, Wall Street’s so-called fear gauge, which measures anticipated volatility in the S&P 500, has fallen to its lowest level in 20 years.