Global equities feared then cheered the culmination of the presidential election, with Donald Trump’s victory defying most polls and pundits, ending the week 2.3% higher.
Tuesday’s presidential election ended dramatically with Republican nominee Donald Trump winning the presidency and Republicans retaining control of Congress. Mirroring the knee-jerk selloff then recovery following June’s UK Brexit vote, stock futures plunged on initial election results but quickly turned positive once US markets opened on Wednesday. We believe investors’ fear of both candidates set the market up for a relief rally as neither was likely to fulfill the campaign rhetoric investors fretted. The GOP will control both houses of Congress with a thin majority and intraparty gridlock likely blocks extreme proposals. Our outlook remains unchanged: we expect this joyless bull market to grind on and up.
European economic data were light. September eurozone retail sales increased 1.1% y/y, modestly missing expectations. Germany, France, Italy, Spain and the UK all reported September industrial production that missed expectations.
In Asia, Japanese October bank lending rose to 2.4% y/y from 2.2% y/y the prior month. September machine orders increased 4.3% y/y, beating expectations. September M3 also beat expectations, increasing 3.2% y/y. Chinese October trade data disappointed, with import and export volumes missing expectations.
The Week Ahead: Focus likely remains on President-elect Trump and his policy intentions. US economic releases include retail sales, inflation and industrial production. The eurozone reports inflation, industrial production and provides a second reading of Q3 GDP. The UK releases inflation and retail sales. China provides an update on retail sales and industrial output. Japan announces Q3 GDP.Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.