US 

Trump’s victory speech calms markets 

Trump’s victory speech calms markets 

Donald Trump’s victory speech has so far struck the right chord with markets. 

As Donald Trump delivered his victory speech and was set to become America’s 45th president, US futures improved as he talked about the need to unify America and extract the potential from across all sections of society. 

Mr Trump made clear statements about his intention to spend on infrastructure, investing in everything from roads to hospitals. 

He also appeased concerns about foreign relations by committing to work with countries that are willing to work with the US, which was contrary to some expectations. 

Nathan Sweeney, senior investment manager of Architas, said this was a continuation of how Mr Trump has softened his rhetoric throughout the campaign and he is perhaps now switching into Presidential rather than campaigning mode.

Mr Sweeney said: “This should result in a less dramatic outcome for equities, currencies and bond markets than many investment commentators had expected.”

Jim Leaviss, head of retail fixed interest at M&G Investments, said as expectations of a Republican win grew last night, the US Treasury market rallied aggressively.  

Mr Leaviss said the rally might seem perverse given that Mr Trump openly discussed “haircutting” Treasury investors, but this was a flight to quality response.  

He said: “The Fed was seen as nailed on for a 25 basis points hike in December, but the uncertainty impact of a Trump win makes this much less likely (and will Janet Yellen still be head of the Fed under a Trump regime?).  

“The implied probability of a rate increase has fallen from over 80 per cent to 50 per cent.  Rate expectations have fallen for 2017 too.  

Angel Agudo, portfolio manager of the Fidelity American Special Situations fund, agreed as the market gets over the hype around the election and its results, the next focus will be on the US Federal Reserve and the next interest rate hike. 

Mr Agudo said US inflation and wages have continued ticking up and until recently a December rate hike was very likely. 

He said we will have to wait and see whether this unanticipated Trump victory will have any bearing on their decision. 

Mr Agudo said: “Looking into 2017, the US economy remains in good shape and should continue to improve at a moderate pace going forward. 

“Growth is likely to be supported by the strong labour market, robust consumption and the continued recovery in the housing market. 

“In general, there is still abundance of investment opportunities in the US but one has to be conscious that we are in the advanced stages of the business cycle, and at aggregate levels, margins are high and valuation multiples are not low. 

“It is important to be selective in the current market environment.”

emma.hughes@ft.com

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