There was some amazing news from ‘across the Pond’ last week – ‘amazing’ in the sense that pundits were predicting a different outcome or at least a much closer race and not a conclusive victory for Donald Trump.
Regardless of whether we like it or not, or what we fear may happen in the future, the people of the United States have spoken and certainly the US and global financial markets reacted well to the news.
Mr Trump and the Republican Party gained 295 Electoral College votes to the 226 of Kamala Harris and the Democrats, a far wider margin than anyone foresaw.
Certainly there are many questions to be answered in the weeks and months ahead as to what this will mean for global affairs, policy and trade, but US markets soared and here in the UK and in Europe too, our markets enjoyed a bounce off the back of that.
European markets followed Asia higher on November 6 as the election result became known. Here, the FTSE 100 jumped 1.1% – a move matched in France and reflected in a 0.8% rise in Germany, with the Euro Stoxx 50 index up 0.6% in morning trading.
Japan’s Nikkei 225 index leapt 2.3% and Hong Kong’s Hang Seng fell 2%. US stock futures rose 1.3% and the dollar also advanced 1.3% against other currencies.
Commentators have suggested Mr Trump’s win will likely lead to stronger US economic growth and a slower pace of interest rate cuts from the Federal Reserve.
In any case, the US market liked it, the Dollar has risen and generally there are positive economic undertones. The fact the main stocks were already very expensive didn’t stop them rising even further in price and over their real value.
As we know, the words ‘financial markets’ could be used as a dictionary definition of ‘fickle’, so it is very much a case of wait and see.
But as with any US President, here in the UK we still need to work with them to give the optimum benefits to us as well as the world in general, so personal insults will not help one iota, nor will rubbishing America for its choices.
The President Elect’s plan to impose tariffs on international trade is a concern but perhaps a post-Brexit UK:US trade agreement is back on the table when (it should be noted) Mr Biden rather nonchalantly ripped that up and scrapped it.
Will Mr Trump bring early ends to the Ukraine war and Middle Eastern conflict? Let us hope so and we see more global stability, though of course we would hope whatever solution is found is an equitable one.
Here at home, despite government borrowing rates escalating after the Budget as the jaw-dropping increases in borrowing and public sector spending growth have been digested, the Bank of England dutifully reduced borrowing costs by 0.25%.
They should be lower but with the uptick in those bond yields, more cuts may be on the back-burner for longer now and inflation will be a problem again, as the cost rises percolate through, such as price rises to reflect the higher National Insurance costs for employment and the Minimum Wage.
The position is exacerbated by US Bonds also sliding as greater borrowing is expected there, so a similar situation and one which will impact us.
But whatever your views on all this, the world will not end, there are controls in place and we should not let our emotions drive judgments or make knee-jerk reactions.
If you feel this urge in relation to your own affairs, pleased take a mental step back and rely upon a balanced, independent adviser to guide you carefully and importantly, listen to what they say.
