After a long and bitter campaign, the Donald Trump Republican party has firmly taken control of Capitol Hill, winning the Presidency, the Senate and the House of Representatives. While portfolio managers were positioned for a Hillary Clinton victory, the markets have been positive to a clear, uncontested election result and a pro-business president.
The market rally that followed the election, was almost as shocking as Trump’s win. The Dow futures were 700points down as the Trump majority was forming up. However, U.S. stocks rose sharply at market opening the next day on speculation that Donald Trump and a Republican-controlled Congress will pursue business-friendly policies. The markets will be watching closely to see how Trump starts putting policy specifics to his broad plans.
President-elect Trump’s policies will be very different from President Obama’s. The primary beneficiaries of the Trump victory will be defence, infrastructure, engineering/construction and more domestically focussed companies. We also expect Trump’s victory to be slightly positive for oil prices.
The markets will be closely watching now for signs that Trump adopts a statesmanlike tone and selects a credible cabinet. . Remember that while Trump is president, he does not have a free reign. He is constitutionally constrained by congress consisting of the senate and the house of representatives.
We expect higher volatility than normal as we go through the end of the year and into the first quarter. That’s where remaining disciplined with your asset allocation is really important.
Don’t hesitate to contact us should you want to discuss this event as it relates to your portfolio. Either myself, Terry, Anthony or Frank will be happy to speak with you.
Below are the before and after November 8 election markets numbers.
Nov 8 Nov 10 Percentage Change
TSX 14,656 14,744 +0.60%
Dow Jones 18,332 18,807 +2.59%
S&P 500 2139 2167 +1.31%
Gold $1247 1258 -1.26%
CDN$ $0.7516USD $74.22USD -1.25%