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November 2016

US stocks jumps after Trump shock

Published: Thursday 10 November 2016

  • US stocks jumps after Trump shock
  • New Zealand Central Bank cut rates to 1.75%
  • US Unemployment Claims later this afternoon

US stocks surged sharply overnight in reaction to Donald Trump's win as President. That was a strong reversal in sentiment after the initial knee-jerk reactions considering Dow Jones futures at one point plunged as much as -800 points.
As of yesterday, markets are pricing in an 81.1% chance of a rate hike by the Federal Reserve in December, up from the prior day's 76.3%. According to a Reuters poll, 85% of 62 respondents expected the Federal Reserve to continue with the rate hike in December, despite Trump's shock win.
Data has been somewhat overshadowed this week. Today’s docket is particularly light, apart from US Unemployment Claims data, expected later today, at 19:00 GMT. We’ll continue to see some volatility in the aftermath of yesterday’s events. Once the US Election hubbub has died down, we can all go back to a little issue called Brexit!
In London, the FTSE 100 index dropped 2% at the start of trading, before recovering to end the day 1% up.
Kathleen Brooks, an analyst at City Index, suggested Mr Trump's acceptance speech, in which he called for the country to unite, had helped to settle some of the market jitters.
Overnight, as was widely expected, the Reserve Bank of New Zealand cut rates by 25 basis points. The accompanying statement did little to support the idea that monetary policy could be eased further and has signalled that this could be the end of the easing cycle. The New Zealand Dollar gained ground after the announcement, although it is back to trading lower this morning. The New Zealand Dollar is vulnerable, particularly if the US Federal Reserve raises rates in December and the risk of the unsettled mood escalating as Trump’s US Presidency looms.


Driving down a remote road, a motorist sees a sign that says: "Watch For Fallen Rocks."

A couple of miles of careful driving later, he spots some pebbles and stops to pick a few up. Arriving in the next town, the motorist carries the stones into the highway maintenance office.

Placing them on the counter, he says to an official, "Here are your fallen rocks. Now where's my watch?"

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 13:30 US: Unemployment Claims 265k 267k
CAD 13:30 Canada: New Housing Price Index (NHPI) 0.2% 0.2%
USD 14:15 Federal Open Market Committee Member Bullard speaks    
USD 19:00 US: Federal Budget Balance 33.4b -81.9b

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Daily Currency Analysis by Michael Hart

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