By Mike Antuono, International Business Writer
The eighth of November will be remembered as both a famous and infamous day in not only American, but world history. That Tuesday marked the day Donald Trump, New York real estate mogul and billionaire, surprised the nation and won the presidency. He soundly defeated his rival, Hillary Clinton, who was the heavy favorite going into Election Day. This is the first time a true Washington outsider has managed to win the White House on the back of a self -funded campaign.
In the lead up to Trump’s victory, financial markets went haywire. Market futures across the board dropped nearly 5 percent before rallying to close higher than their pre-election levels. This sudden reversal in sentiment rocked equity markets. Shares of banks on both sides of the Atlantic rallied particularly well, in hopes that Trump would lighten the regulatory load currently affecting them. Trump has publically criticized Dodd-Frank numerous times, claiming that parts of the law are ineffectual and hurt business. The subsequent rise in interest rates will also benefit banks’ bottom lines, as they are able to loan money at higher rates.
International bond markets saw huge rises in interest rates across the board. With inflation expectations being raised, investors demanded higher yields and prices fell.
Japanese bank shares soared post-election, with Nomura leading the way with an 11 percent gain. This is due largely in part to the yen falling to its weakest against the dollar since July, which eases the burden on the Bank of Japan and improves conditions for lenders.
Credit Suisse saw gains of 9 percent, while Barclays and Deutsche Bank were up over 5 percent. These institutions saw larger gains than some peers due to their larger US exposure.
Aside from financials, international commodity markets have been booming on the back of Trump’s proposed infrastructure spending. Chilean copper producer Antofagasta PLC was up 16 percent following the rise in copper prices. International coal prices saw a slight rise, with the benchmark European API2 thermal coal prices up 1.4 percent.
Trump has warned that NATO members who fail to pay more for their own defense could not rely on continued US support. Consequently, shares of BAE Systems PLC, Europe’s largest arms maker, have increased 11.7 percent.
The Russian economy could end up being a big winner following the election. Both Trump and Putin have spoken of wanting a good relationship with one another. This could remove existing sanctions on Russia.
Aside from the election’s winners, there were some areas that did not fare as well. Emerging markets suffered on Trump’s campaign rhetoric involving trade. Anti-trade policy could severely affect emerging markets reliant on exports to the developing world.
The Mexican peso fared worse than any other market. Trump’s campaign was based largely on promises to stop trading at a deficit with Mexico. The potential of a wall between the two nations could further complicate trade and relations as well.
The Chinese yuan also fell to a six year low against the dollar. The president elect has consistently called China out for being a “currency manipulator.” Fears around worsening relations between the two nations caused the drop in value, and consequently reduced trade with the world’s largest exporter.
With Donald Trump at the helm of the United States, the international business landscape will likely be severely shaken up, but so far, the financial markets have largely interpreted his proposed changes as positive for business.
A version of this article appeared in the Tuesday, November 22nd print edition.
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