Trump’s bold promises to jumpstart the economy is fueling a US stocks rebound. Rising health care shares are pushing American stocks to new heights. Equities are also recovering, emboldened by plans for economic expansion. Oil joined this post-election rally as producers hinted that they would agree on OPEC’s production cuts. These rallies weren’t limited to just stocks & commodities, the dollar also hit a record high. This fresh turn of events shows that the market has finally wrapped its head around Trump’s presidency. Only time will tell how long this post election rally will last.
US Stocks Rebound in the Face of Criticism
Even though the stage is set for the Federal Reserve’s rate hike, American stocks are reaching new heights. Four major American benchmark equity indexes hit all time highs. U.S. stocks enjoyed a 6-day increase, achieving their longest winning streak since June. Many attribute these valiant comebacks to growing optimism surrounding the US economy. Apparently Trump’s economic policies have convinced experts that they are ready to handle increased interest rates.
Another factor in this rebound is the ECB’s pledge to expand limits on asset purchases. This includes shorter-dated securities, which will drive down burrowing costs for banks. Despite these promising developments, the central bank has remained adamant that it will curtail monthly additions after March. These new twists have been interpreted as a buy signal in a majority of the financial market. Since optimism is remaining high, this post election rally shows no signs of abating.
Despite stealing the show, US stocks weren’t the only ones to show signs of recovery. The S&P 500 rose 0.3% to 2,253.25, these figures put the index up 5.3% since the initial election results. This impressive recovery put US stocks ahead of the pack. However, the Stoxx Europe 600 Index also made a rebound. Drug makers & real estate companies helped propel European stocks by 1.1%. This generous increase put them on their best week since January.
Even though most European stocks are recovering, Italy’s stocks kept tumbling. Political instability set the stage for Italy’s FTSE MIB Index to fall by 1.2%. As their financial sector continues to crumble, the future for Italian stocks looks hazy at best.
Commodities rose across the board in the midst of OPEC’s efforts to curb oil production. Copper & Zinc both gained 1%, while gold tumbled by 0.5%. West Texas Intermediate crude rose by 1.2%, putting it a $51.45 a barrel. Even though most countries are agreeing to OPEC’s terms, Russia is still fiercely debating. Experts fear that the Kremlin believe that OPEC will fall short on their commitment. Even though the tension is mounting, it looks like OPEC will succeed in curbing global oil production.
This week was marked by the rise of the dollar. The greenback has advanced 0.6%, putting it at $1.0557 per euro. Thursday was a crucial day, since the dollar jumped 1.3% in 24 hours. The Bloomberg Dollar Spot Index also reported a 0.5% gain on Thursday. After all is said & done, the greenback held steady after gaining 0.4% against its major peers. The impeachment of South Korea’s president led to the won declining 0.6% against the dollar.
The continuation of this post election rally is shining the spotlight on the mixed repercussions of nationalism. Apparently, Trump’s heavy handed policies may have a brighter future than we thought. In a country that was devastated by shrewd bankers, investing heavily on the US economy is always welcome news. However, until now all this is just patriotic bravado. Hopefully Trump can deliver results that match the growing hype.