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Markets undergo a Trumpectomy

Financial markets will take a while to absorb today’s shock win by Donald Trump as he looks to succeed Barack Obama as the 45th President of the United States of America.

If Brexit was a shock to markets then this is likely to be perceived as Brexit on stilts, although today’s reaction appears much more orderly, despite sharp falls in the aftermath of the realisation that Hillary Clinton had fallen short in her campaign to win the White House.

That the reaction seen thus far appears to have been much more tempered is probably due to the emollient and conciliatory nature of Mr Trump’s acceptance speech, and the fact that there was always that nagging doubt that the pollsters may well be wrong. This has once again proved to be the case, begging the question what is the point of opinion pollsters?

As you would expect, the US dollar has sold off but is off its lows as the prospect dawns that today’s uncertainty may well translate into a delay in next month’s US rate rise. Gold prices have also slid back from their overnight highs, even though they are still up on the day, as investors adjust to the new maelstrom of uncertainty that this result brings.

While Hillary Clinton was perceived as the status quo candidate, a Democrat win would still have meant that the new US president would have faced challenges. That the new president is Donald Trump, a man of unpredictable temperament suggests that this wild ride for markets could well continue.

Early movers in London have been healthcare stocks, which have pushed higher as the prospect of the crackdown on price gouging promised by Hillary Clinton becomes less of a possibility. Mining stocks are higher on the back of a rebound in commodity prices, while financials have come under pressure as markets partially price out the prospect of an imminent US rate rise.

For now, investors are likely to adopt a wait-and-see approach to the effects the waves this particular rock has had in its pond.

US markets look likely to open significantly lower on the back of this morning’s news as investors weigh up what comes next.

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