Trump’s victory — a stimulant to growth in the Stock Market
Obasan Taiwo James-Yakub
Department of Economics
University of Lagos
It seems the global market have been enjoying quite a success from the results of the US Elections. Donald Trump’s victory in the US presidential election was expected to make the stock market very vitality because of campaign style which was perceived to be divisionist and non inclusive but it is very shocking that on the second day after his election Wall Street investors were in a bullish mood, with the Dow Jones industrial average hitting a record high. The Dow rose as much as 191 points to reach 18,780 by 1pm in New York, while the other two main US stock market indexes, the S&P 500 and Nasdaq, also climbed.
It does not just end at the States but the whole world have been experiencing it’s triple effect as the biggest market in Sub Saharan Africa reverse losses, gain by N16.5bn. the Nigerian equity market retreated from a 6-day losing streak at the end of trading session on Thursday as the Exchange All Share Index (NSE ASI) recovered 0.18 percent to close at 26,221.75 points, while market capitalisation grew by N16.5 billion to close at N9.026 trillion
Though the day’s performance was linked to the 3.08 percent growth of the banking index which recorded the highest appreciation amongst other sector indices, following gains in Guaranty, Zenith, Access, UBA, Diamond, Sterling, Union and FBN holdings - it cannot be divorced from the recent change in Speculations in the world following the political change in the world atmosphere on the 9th of November.
Investors’ appetite showed improvement but remained weak as market breadth closed with 15 gainers paired against 19 losers.
The Guardian see the rise in Shares partly on relief at Trump’s tone and the lack of references to erecting trade barriers or a wall across the Mexican border.
As necessary for capitalists, They smartly looked for opportunities. If Trump was going to be more sensible than his campaign pronouncements implied, then what about his policies? Trump has pledged to cut corporation tax, a move all businesses would like.
He has promised to cut back regulation and scrap climate change targets, including abandoning the Paris agreement to reduce emissions. Oil and gas shares duly rose.
Speculation that the Republicans could ease rules on banks, including scrapping the Dodd-Frank regulations introduced after the 2008 financial crisis to curb risky behaviour, sent bank shares soaring.
In his victory speech, Trump talked about putting Americans to work to overhaul the country’s creaking infrastructure. These promises sent shares of mining and construction companies up.
Only time will tell if the victory of Donald Trump will continually bring luck to the Capital Market.