Equities around the world will have to coexist from now on with one of the most unexpected scenarios. With the presidency of the United States in the hands of Donald Trump after defeating the Democratic candidate Hillary Clinton in the presidential elections on November 9. Against all soundings that had been published in the North American media.
It is an unprecedented and somewhat atypical scenario with which the stock markets will have to relate from now on. There are several points in Trump's program that may affect the evolution of the main financial indices. For now normality is the common denominator of all of them. Confusing many investors who anticipated a crash in equity markets.
Starting in January, the bags will be the subject of a deep analysis as it will be one of the thermometers of the presidency of Donald Trump. Not only in the US indices, but also in the European, and by extension to other more remote and even less important squares. In any case, there is no doubt that this market will once again be the protagonist of the public's eyes.
Trump: received with peace of mind
The reactions of the futures markets during the scrutiny raised fears for the worst. With falls of up to 5%. As never seen on Wall Street. But strangely enough it was not the trend when the exchanges opened their sessions the next day. Under a sign of absolute normality, where even the indices on the other side of the Atlantic opened n green until the end of the session with revaluations above 1%. Not much different happened in the equity markets of the old continent that also closed positively.
The evolution of the financial markets was not very different during the rest of the week. With a slightly bullish trend, but in any case positive. This trend has misled a good part of small and medium investors who expected sharp falls. Even some important market analyst predicted even a certain sense of salesman panic. Something that has not happened since, not even remotely. If not the opposite.
From this unforeseen scenario, there are a large number of savers around the world who do not really know what to do at the moment. Something that you yourself can share. Without a definite idea if it is time to buy shares, sell them or go to alternative markets as a formula to make the savings profitable in the best possible way. A whole host of doubts that at the moment prevent you from developing a correct investment strategy.
Why haven't the bags come down?
There is no crystal ball to interpret the intentions of investors. But there are at least a few that explain what has happened in equities in the days after Donald Trump's election as the new president of the United States. One of the most widespread refers to the fact that the drops in the stock market had already been discounted in the days prior to election day. Because indeed, the US stock market was left in this period just over 5%. Something that had not happened since the beginning of the 2008 economic crisis. Something similar was taking place in European equities, although not as intensely.
Another explanation given to this very positive reaction from the international stock markets is that it is a kind of truce granted to the new tenant of the White House. Not surprisingly, investors want to see what their first measures, especially those related to the economy and international relations. And something very important, be waiting until you see what their appointments will be. They will give the odd clue about their intentions.
In any case, there has been no hysterical movement, as some analysts anticipated. Not even remotely. To the point that if you have done some trades in the stock market these days, in all probability right now they will be winning. Not in a spectacular way, but in profit after all. With very similar contracting volumes to those of other periods of this year. As they say in these cases, the stock market is under control. But what can happen from now on? That will be another question that we will try to explain to you below.
Possible sources of instability
It will be the actions that President Trump takes that will determine the course of equities in the coming months, even years, based on their repercussions. Several are the points of his program and that offer greater controversy among investors. One of the most important is the intention of the president of stop the globalization process in the international economy. Through the review of its agreements with certain geographical areas: European Union, Southeast Asia, etc.
Another point of special relevance is that which will have to do with a higher level of protectionism with the American economy. And that can lead to major imbalances in other parts of the planet. Any measure in this sense would be interpreted by the markets in a very negative way. And its main effect would be a general decline in the values of listed companies. On either side of the Atlantic. Without ruling out severe cuts that could be perpetuated for many months. In this case, you would have no choice but to refrain from taking positions in the financial markets for a long time.
A scenario that is also worrying is the relationship of its economic measures with a change in the policy of the United States Federal Reserve (FED). In particular, everything that has to do with monetary politics and the evolution of interest rates. Nor would it be very well taken by investors. And as a consequence of this change, the short positions in the financial markets would clearly prevail over the buyers. This trend seems beyond question.
International relations count
Unlike other scenarios, in this particular one, the international relations that are imposed since the presidency of Donald Trump could have a great influence on the evolution of the stock markets. Above all, with regard to the European Union and the role it is going to assume in the new world order. If you want to invest part of your assets, you will have no choice but to be very attentive to the chess game that will take place over the next few months. With a very notable impact on the equity markets.
Also, bilateral relations with Russia will certainly play a relevant role in the price quotation of listed companies. You cannot forget this scenario to carry out your investment task with greater guarantees of success in the operations that you develop within a few weeks. Even with the option that you can turn to other alternative markets that may have a more than remarkable revaluation potential.
In this way, your investments will also be playing outside the economic borders from the international policy of Donald Trump. It will be a new scenario that you will have to live with from now on. To the point that it will be much more difficult for you to carry out any kind of strategy in the stock markets. With a really very novel scenario with respect to other historical moments.
Strategies that can help you
As doubts will probably assail you as to what you should do with your savings, it will be very useful if you can import a series of actions to operate in this new scenario that is presented under the presidency of Donald Trump in the United States. These are some of them.
- Act very cautiously, and in any case do not rush into your investments. The fluctuations in the price of the shares will be the order of the day.
- You cannot rule out as a real scenario that the stock markets fall into a downtrend of great intensity. Even with very punctual crashes. Given this, you must protect your positions.
- It will be time to review your relationships with alternative markets. To the point that you can take positions in some of your financial assets. Raw materials and precious metals will be some of the proposals you have.
- You will not be able to forget that liquidity it will be a very appreciated good at this time. Although it may be hard to believe, it will be one of the most effective ways to protect your savings. You have some term deposits that can solve this problem in the short term.
- The terms of your investments in the stock market should be shortened significantly. Leaving the medium and long term for shorter periods in your stay. In this way, you will avoid any scenario that could subtract the balance of your savings account.
- If you enter the equity markets, remember that you have a few refuge values that perform better than the rest in the most unfavorable scenarios. Even with a performance that can be more than interesting.
- You must be very attentive to all the movements that are generated in the North American market to get ahead of events. For this, your information will have no choice but to be flexible and agile through the most modern communication channels. Not in vain, it will be one of the strategies that you must develop in this scenario.