The Global Financial Markets: The Impact of Donald Trump’s First 100 Days

Source

The clock stopped on Donald Trump’s first 100 days as the 45th president of the United States of America on Saturday 29 April 2017.

There have been mixed reactions to his achievements; however, if you look at the financial markets, the general feeling is that ”

There have been mixed reactions to his achievements; however, if you look at the financial markets, the general feeling is that “Trump has exceeded expectations, and the global economy has stabilized since [his] initial days in office.”

 

The financial markets appreciate Trump’s pro-business stance

There is no doubt that financial market investors appreciate Trump’s pro-business stance.

This can be seen in the fact that the DOW and the S & P 500 have both seen historic increases recently.

He is also proving to be less volatile that initially predicted which is good for market growth; however, Gold is trading down as a result of the positive impact Trump has had on the American economy over the last 100 days.

According to Forbes, “there’s only been one day this year where the Dow Jones industrial average and S&P 500 indexes closed down more than one percent.”

It should be remembered that Gold is a safe-haven stock or hedge fund.

Therefore, Gold’s price increases when investors take the money out of higher-risk investments and buy gold to protect their money from very volatile markets. Conversely, when the financial markets are relatively stable, investors sell the gold they purchased and invest in riskier stocks to grow their wealth.

Thus, the gold price will drop.

 

Donald Trump: The good, the bad, and the ugly

The good

We can say for certain that Trump’s first 100 days has been a mixed bag of successes and failures. The financial markets love the fact that he is pro-business, and he is working hard to get American businesses up and running. He is also less volatile than the market analysts originally predicted.

According to Bloomberg, Trump believes his ordered strike on Syria’s Assad regime for its use of chemical weapons is an accomplishment. Furthermore, he believes what he has “accomplished on immigration and criminal enforcement is nothing short of historic… The change on defence has been profound as well.”

 

The bad

However, his foreign policy is still in tatters, or largely unrefined. Andrew Hammond states that “[Trump’s] period in office so far has been much clearer for his reversing of previous campaign rhetoric and pledges, than fulfilling them.” He had promised to move the USA’s foreign policy in a new direction.

For example, Trump has already extricated the USA from the Trans-Pacific agreement, and he has promised to review the USA’s involvement in the North American Free Trade Agreement.

These two examples show that Trump’s government is not keen on international trade. I’m not sure how this attitude will impact the financial markets in the short-term; however, it is sure to have a negative impact in the long-term.

Donald Trump made much of the fact that he was going to increase the import levies on all of the Chinese goods imported into the USA without much regard for the fact that the people who are most likely to purchase these goods are the lower income earners or the blue-collar workers.

If the import tariffs are raised by 45% or more, then the cost of these goods in the shops will cost at least 45% more. There is not a chance that wages will increase by 45% at the same time.

I am not sure whether Trump will go through with these plans. He seems to have softened his stance on China for now. We will have to wait and see what the future holds.

 

The ugly

I believe that his ability to change his rhetoric at will is possibly the ugliest part of his first 100 days.

He says a lot and contradicts himself as he chooses. These contradictions make for nervous, jittery investors; ergo, volatile, unstable markets.

Unfortunately, the financial markets also seem to be more vested in what he does than they did with any of the other US presidents. Therefore, his decisions and the accompanying rhetoric will have a greater impact on the financial markets.

 

Final Words

In spite of the good that Trump has done to the American economy, and by extension, the financial markets, my advice is not to make any hasty decisions. The markets are stable for now.

Trump seems to be doing less harm and more good. However, the unknown lies ahead. How long will it last until he makes a decision that is counter-intuitive to what the global markets expect of him?

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

two × 4 =