One of the most notable controversies is the alleged involvement of his campaign team with Russian officials, something which is now being investigated. Here are some of the possible effects this might have on the American stock market.
It is well documented that controversial political events can have a major effect on global markets, especially those which are incredibly volatile (such as forex). Trump’s actions seem volatile in themselves, and are making it difficult for traders to accurately or confidently predict market trends.
His upheaval of traditional politics means major changes to the economy could be made frequently, which will have far reaching consequences for all types of trading. He has already planned significant cuts in the Department of Energy, which is likely to adversely affect the value of company stocks in the hi tech energy sector.
The ultimate sense of uncertainty pervading the stock market as a result of Trump’s actions is tangible, although it is fair to say that as of yet, there have been no major downturns. That being said, the Russia enquiry has only just begun, and it remains to be seen just how deep Trump’s involvement with Russian officials was during the election.
Some sources suggest that uncertainty levels are worse than they were after the financial crisis in 2008, showing just how powerful an impact Trump is having on investor confidence. This is bound to introduce more volatility to the markets in the coming months, or at least heighten the chances of various assets becoming more volatile.
Surge in Haven Assets
As a result of the heightened potential for market volatility, there could well be a shift away from standard assets like stocks and shares to safe haven assets such as gold. These become popular in times of global crisis/political upheaval because their core value usually remains stable, whereas other assets can drastically fall in value.
Gold, although currently trading at $1,235, has enjoyed surges in recent months, hitting $1,296 back in June. This could become a common trait as people hedge their portfolio against the potential outcome of the Trump enquiry.
As of yet, however, there are no indications of any serious market downturns. In fact, the American stock markets have been on a steady rise since Trump’s election, mostly as a result of his pro-growth policies.
The Dow Jones recently hit an all-time high of 11,897, with the Trump enquiry seemingly having little effect on it so far. Trump is, after all, just one man, and his influence on the stock markets could well prove to be limited in the long run.
The Trump enquiry is undoubtedly one of the most controversial events to occur in recent American history. Stock markets are currently performing strongly, but as the enquiry gains momentum there could well be further shocks to come, which may well affect the performance of various assets on the American stocks markets.