Markets still higher as the world reacts to Trump

By GKFX Team  |  10/11/2016 09:11

Markets in Europe are climbing higher yet again today after a sensational recovery yesterday on the back of the shock win for Donald Trump in the US Presidential Election. It was stocks that were the major focus in the trading session with the Dow rebounding from an 800 point loss to close up almost over 250 points on the day. It was Trumps acceptance speech that sparked the fierce turnaround as he calmed fears.
 
The biggest fear for markets had been around the prospect for the Fed’s December rate hike that had almost been priced into the market. In the past the Fed have used uncertain markets and aggressive downside moves as reasons not to move the bench mark interest rate. However market probability, which was up at 85% prior to yesterday’s result, dropped only mildly to 75%. The prospect that rates will be higher and regulation lower in the financial sector under a Trump presidency has helped every European bank to open in the green so far this morning.
 
The US dollar is a focus as well today after similar moves during yesterday’s session. Asian crosses are a pretty big focus after the RBNZ cut interest rates to 1.75% as expected and raised their inflation target for 2017 to 1.7%. Gold and Oil prices will also be another focus as the US dollar reaction is key to the safe haven aspect of the gold price. While relations between a US government led by Donald Trump and the Middle East are key to how oil prices react, again we can see that importance in the reaction on WTI yesterday.
 
On the calendar today we are looking a little light of real key data, which may not be a bad thing after the volatility of yesterday’s session. The headlines will come from the initial jobless claims released at 1330 this afternoon, as well as Fed speak from Bullard who will be closely watched for his comments on the new President.
 
All in all it seems to be as you were for global markets this morning, with most carrying on where they left off yesterday. However we cannot rule out more volatility as a just people start to decipher exactly what a Trump government means for the Fed, the US economy and the global economy.