Thursday December 22, 2016 - 14:59:18 GMT
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Stock Market Overview After the US Elections
The month, marking the election of President-elect Donald Trump, has been a predictably tempestuous one for global stock markets.
Although overall valuations plummeted in the immediate wake of the New Yorker’s historic victory, both the Dow Jones and Russel 2000 small cap indices soon posted gains as investors reacted warmly to Trump’s ambitious pro-business stimulus plans, expected to be implemented once his presidency formally gets underway in January. The S&P 500 has now rallied by 5% since Election Day.
The stock market’s gains in the wake of initialuncertainty have been driven in large part by the exodus from other asset classes which have plummeted in value, such as precious metals, bonds, and yield-focused equities.
In November, Gold suffered its worst month of losses since 2013, and as investors rush to rearrange portfolios by taking refuge in securities, analysts fear that the current climate of market turbulence could be just the tip of the iceberg, owing to the predicted cascade effect of those asset classes.
However, the stock market hasn’t been uniformly affected by the recent volatility.
Yield-sensitive stock classes such as telecoms, utilities, and REITs, have, just like the bond market, been badly affected.Stocks in industries that will be the likely beneficiaries of Trump’s ambitious promised infrastructural upgrades, such as mining and the fossil fuel industries were buoyed by his victory. The chaotic state of the market was demonstrated by researchers at LPL Financial,showing 300 NYSE issues making 52-week highs, while another 300 issues conceded 52-week lows within that same period.
Other global political dynamics have also played into the turmoil the stock market is currently experiencing.
June’s Brexit vote gave investors pause for thought as to whether prevailing interest rates were likely to be the lowest in living memory. As what has been called an era of ultra-cheap money comes to an end, portfolios will shift away from the traditional safe haven investment classes and into stocks. This means that the volatility the market is currently experiencing will likely continue into next year and beyond.
Those looking to gain from exposure to both the long and short dynamics of thisvolatility can choose from a variety of online trading platforms, such as UFX.com, to open their positions.
One thing is certain: the coming year is likely to be an exciting one on the stock market.
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