The American Election and the Stock Market, a Roiled Dollar.
November 14, 2016 by Staff
Filed under Money/Business, Politics, Tech/Internet, Weekly Columns
(Akiit.com) Some are calling it the “Trump Effect“; a scenario that has been predicted to cause a huge shift in the stock world. The market was initially trapped in the midst of two large opposing forces; Democrat Hillary Clinton and Republican Donald Trump. But these two seem to be closing the gap that has existed between them for a while, forcing investors to move into safer ventures like gold and Swiss franc investments.
The Asian shares went down to a 7-week low, slipping down by 1.3%. Japan’s Nikkei followed suit with a 1.8% drop. While the Swiss franc is the better option for investors because of its strengths in the present market, both the Mexican Peso and European shares have slipped, the latter dropping to a four-month low; approximately a 0.5% to 0.8% fall according to CMC Markets data. This drop also extends to France’s CAC, DAX (Germany’s), and Britain’s FTSE. Coming back into the U.S., we find that the dollar is not holding up so well either. Placed against the euro and the yen, it has a lower 
footing. With days left until the votes are cast, investors seem to have been alarmed by the rate at which the elections are tensing up.
Trump based his campaign on a proposal to surround the United States with a wall to counter the smuggling of illegals from neighboring country into America. He also proposed to increase the Customs standards on all imports coming from Mexico, seeking to increase monitoring traffic and reduce the entry of drugs into the U.S. this, if it comes to pass, will not work in favour of the peso. It has seen the biggest drop yet, and still, it continues to lose to the dollar, losing 19.380 to the dollar so far. Trump is undecided in his stance on the questions of foreign policy, immigration and relations in trade. Clinton, on the other hand, stands for the existing state of affairs. The uncertainty that surrounds Trump is what bothers investors the most, and since Trump and Clinton are showing signs of mending their relationship, investors are not sure if Clinton will be of the status quo anymore.
It seems that the stock market had become dependent on the feeble atmosphere of the United States Elections. Trump has a protectionist view regarding international trade, brokers therefore deliberately exchanged the dollar for a weaker dollar under the impression that Trump might prefer this.
In the U.S. trade, the euro went up by $1.1069, a 2% rise from its previous slip pf $1.0851. This happened recently, not more than a week ago. The last number registered by the euro was $1.1065. The yen, on the other hand, beat the dollar as the latter dropped to 103.69 from a high of 105.54. The rise of the dollar was predicted to follow after a win by Clinton, but now that her win is no longer assured, the position of the dollar also remains on a market low. In the current market, seeing as the euro had taken the most loss against the dollar, investors thought it wise to buy back the former. This was besides making investments in the risen Swiss franc that was now at 1.0782 and gold that was at a rate of $1,291.6 for one ounce.
With the tension in the electoral race continuing to rise even higher, interest rates in the stock market are expected to hike in December. The probability of this happening is 70%. Taking a look at oil, for instance, this product hit a low after reports of an overflow in the U.S. crude oil inventory. The supply for oil was overly above the demand for it, and to this end, the prices fell to $47.82 for one barrel, a small rise from a low of $47.72 a few days ago. This loss and up and down movement is what will inform the Feds to increase the interest rates in December.
Investors moved away from assets that could pose any risk to those that were considered safe in the economy, but even as they moved away from assets like copper, this product rose to $4,922 for one tonne. The rise was also registered for iron ore products in the Chinese Market.
Staff Writer; Michael Brown