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Investors braced for volatility after Trump victory

Key European elections could mean there will be more volatility in the coming months


Alex   Black

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Alex   Black
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Picture: Michael Vadon
Picture: Michael Vadon
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Investors braced for volatility after Trump victory #clubhectare

Investors have braced themselves for increased volatility following Donald Trump’s shock victory.


The election result led to a sharp fall in equity and commodity markets on November 9, before a recovery the following day.


David Sheppard, Gleadell’s managing director, said the effect on the markets would depend on the president-elect’s actions.


"How the new administration goes about the business of current trade deals and the WTO will keep currency dealers edgy, and may have a major impact on global growth, or the lack of it."

 

Reassurance


Benjamin Bodart, director at CRM Commodities, said the markets had been reassured by Mr Trump’s actions following the result.


"In the run-up, all the markets were cautious or anxious as he has been against the trade agreements.


"Since then it is almost like we have a new Donald Trump. He has been a really different character."


In the short-term, there could be a boost for agricultural exporters as the dollar fell following Mr Trump’s election, which would make US goods more competitive on the international market.


Tariffs could also have an impact. Before the election Mr Trump proposed a 45 per cent duty on imports from Mexico and 35 per cent on China which could encourage reciprocal tariffs on US goods.

 

France


Mr Bodart pointed out there could be more volatility to come with elections across Europe next year, including another potential upset from National Front’s Marine Le Pen in France.


"This is why we are seeing the euro losing momentum," he said.


"If we have a strong GBP it makes exports a little less trade competitive."


"It came as a surprise, the same as Brexit. We have to deal with the risky environment," he said.


"Farming has been dealing with it for the past two centuries so I think we can deal with it now."


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