Joining Donald trump in the position of President of the United States marked a new era for the financial markets, and, if guided by historical examples, the upcoming month will be anxious for wall street, but is bullish for the dollar.
A month after the inauguration of each new President of the United States since Herbert Hoover in 1929, the S&P 500 index on average declined by 2.7 per cent, shows an analysis by Reuters.
Wall street grew only in the first month of the presidency of Hoover (+3.8 percent), John Kennedy in 1961 (+6 percent), George H. W. Bush in 1989 (+5.3 percent) and bill Clinton in 1993 (+0.8 percent).
In the first month all the other presidents they have. Even in the early presidency of Ronald Reagan and Barack Obama, during the two terms of which wall street has grown more than 120 and 165 percent, respectively, the market decreased by 4.8 percent and 15 percent.
The dollar usually shows the best results. An analysis of the period from the beginning of 1970-ies, when was the abolition of the gold standard, indicates that in the first month of the presidency of the first elected leader of the USA the American currency grew on average by 2.2 percent.
Donald trump takes office amid almost unprecedented fears of investors.
“Trump has two sides: one focuses on incentives, accelerating global growth and another trump is a protectionist, it could trigger the opposite. So the main question is: which of them shall we have?” said James Binnie of State Street Global Advisors.
The markets went up after the trump wins the election in November in response to his promises about accelerating inflation and economic growth: stocks have hit new highs, increased sale of gobongo, and the dollar has updated a 14-year peak against the Euro.
But with the approach of inauguration of this dynamic gradually disappeared. This week the Dow Jones and the dollar reached its lowest levels over the past six weeks, the yield on 10-year U.S. Treasury bonds fell to the lowest level since the end of November, and the price of gold rose to its high for the last two months.
Some investors prefer not to take serious steps.
“We remain neutral as we do not know exactly what direction will take the trump”, says investment Director Robeco Investment Solutions Lukas Daalder.
According to analysts at Bank of America Merrill Lynch (BAML), despite the fact that in the last few weeks, there is obvious fading of the optimism caused by the promise of trump, investor sentiment are generally high for the last three months.