Author : , Date : 14 November, 2016

Stock Market News After Trump’s Victory

Republican Donald Trump has been elected the 45th president of the United States. The 70-year old billionaire businessman defeated Hillary Clinton in the general election on November 9, 2016. Swing states in the Midwest and in the southeast decided the battle and Trump received about 1 million votes more than Clinton. The President-elect of the United States is scheduled to take office on January 20, 2017.

How Do Stock Markets React?

As described in one of our previous posts, How The Us Presidential Election Will Affect Financial Markets. Trump will bring more changes in policy. We mentioned in this post that stock prices might fall after Trump’s victory.

The drop began well before Trump was elected. Clinton’s chances were the highest at 89 percent in August, but her odds steadily fell. Especially polls carried out in the last 2 weeks of the election campaign showed that the Republican nominee gained strength. Clinton’s projected margin fell from 6-7% to 2-3% in this period. Financial markets, however, reacted to the change before the election. Dow Jones Industrial Average fell from 18,199 on October 26th to 17,888 on November 4th.

Analysts thought that Clinton still had a 66 % chance to win the election. The Democratic nominee showed strength in early voting. Dow Jones increased, it reached18.332 on November 8th.

As the votes came in for Trump, US stocks plunged. Futures on the Dow Jones Industrial Average fell 506 points, about 4% within a few hours. Not only was the US stock market effected by the result of the presidential election. British futures indicated losses as high as 4%. The Japanese Nikkei 225 index fell 5.1%. The Hang Seng Index in Hong Kong was down 2.7%, Australian and New Zealand markets fell by a similar measure. On the other hand, investors’ safe haven gold rose over 3.2%.

What Can Binary Options Traders Learn From This?

As the case of the US presidential election shows, unexpected things may happen any time. We can never make a 100 % sure prediction. Not even polls can be 100 % sure. The voting came in decidedly in favor of Trump, defying the expectations of polls.
Jeffrey Gundlach, the founder of DoubleLine Capital LP commented on the result: “I think we can all agree that Donald J. Trump has massively outperformed expectations in the past.”
The result of the US election can be compared to Britain’s vote to leave the European Union in June. Polls did not predict the outcome of Brexit either. Brexit had a serious impact on financial markets as well.
Every binary options trader should keep this in mind. The first important message of these scenarios is not to open short-term positions on the day of an important voting, or not to trade on that day at all. You will have a tremendous lot of opportunities to trade afterwards. No need to hurry. The second point is that traders should risk no more than 5% of their capital within a few days after elections to limit bigger damages. The third point: After a while, you can look for a correction. Stock prices rise in the long term, so a correction will definitely come.


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