Yesterday, for the second day in a row the markets were actively buying shares of large US banks and industrial companies, resulting in the Dow Jones Industrial Average closing at a record high near 18808 up 1.2%, surpassing the previous record level of 18636, which was reached on August 15. After strong volatility in the first two days after the US election the world’s financial markets next week should begin to calm down a little. The dollar index, a measure of the US currency against a basket of global peers, was 0.1 per cent lower at 98.697 and facing its first decline in five sessions. The three most popular post-election trades are buying the S&P 500 (according to 30 per cent of investors surveyed), buying gold (27 per cent), and buying the US dollar.
Currencies: EUR/USD declined from 1.0908 to 1.0865 until a mid-afternoon rally lifted back to the 1.0900 area. USD/JPY held on to its overnight gains and bounced within a ¥106.25-¥106.95 range. AUD/USD was at 0.7740 then plummeted to just 0.7568 and then profit taking lifted it back to 0.7600. Sterling surged 1.5 percent to a six-week high against the euro on Thursday, as investors unwound short positions against the pound amid uncertainty about the fallout from the U.S. election and focused on upcoming European political risks.
Stocks: The Dow Jones Industrial Average picked up another 1.15%. US bank shares rallied as Donald Trump appears to be on the side of those wanting to repeal the Dodd-Frank Financial Reform Act, which was brought in 2010 in a bid to improve the stability and transparency of the financial system. The Nasdaq lost 0.81% due to declines in major technology companies.
Oil and Gold: Crude oil traders appear perplexed. On one hand, they think that Donald Trump’s victory will lead to an economic rebound and therefore, increased demand. On the other hand, Trump is not in the leadership seat yet and the crude oversupply issue hasn’t been addressed. Earlier, the Energy Information Administration warned that the 2017 oil market could look very similar to the 2016 one. WTI bounced within a $44.35-$45.35/barrel range and closed near the low. Gold was down 1.5 percent at $1,258.90 an ounce by 2000 GMT, after touching $1,258.06, its lowest since Oct 18. U.S. gold futures settled down 0.6 percent at $1,266.40.