Equity markets to recover post-election
Equity markets will recover after the US Presidential Election result, according investment house, Instreet Investment.
Instreet Investment managing director, George Lucas, said the market was expecting a five to 10 per cent sell off knee jerk reaction if Trump won, while US markets would recover the three per cent that they lost, if Clinton won. However, that was dependent on who would win the Senate and the House.
Although Asian markets would be the first to respond to the US Presidential Election result, they may have closed before a result would be known, Lucas said.
"If you're a Trump hater, beware — this election is too close to call and the relatively high proportion of undecided voters, along with the historically high disapproval ratings for both candidates, means it could go either way. Clinton appears to hold a slim lead but it's within a margin of error," Lucas said.
However, if Trump wins the election, there would be little excuse for the US Federal Reserve (The Fed), not to hike interest rates in December, particularly amid recent strong data, Lucas added.
The last couple of weeks had already been miserable for Australian and global investors, as market participants feared Trump would win the election, he said.
"The S&P500 has shed about three per cent over the past nine trading days; the ASX200 has shed 4.6 per cent over the last two weeks; whilst the pan-European Stoxx 600 index fell to its lowest point since early July. In Japan, the Nikkei 225 dropped 3.1 per cent last week — its worst drop in four months. Not helping the situation was a sell-off in oil and weak US employment data."
As that happened, the US money market fund (a proxy for cash) absorbed more than $36 billion in the week to 2 November, as investors looked for safer assets, he said.
"Investors also scrambled for ‘core' government bonds, gold and the Yen."
Recommended for you
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.
Nuveen has appointed a global head of estate, a successor to Chris McGibbon who steps down after almost 25 years.
