Initial market reaction to an incoming Donald Trump presidency has been positive for most financial markets, however commodity market moves haven’t been as decisively upward as the market digests several unanswered questions.
Neil Townsend, market analyst with Grainfox, says the very early reaction on Wednesday trended a little negative, even, and that’s not likely a surprise given the injection of uncertainty with any election outcome.
But looking forward, Townsend says that markets are likely to move in to a wait-and-see approach to much of what was promised on the campaign trail. Trump has made promises regarding oil, tariffs, and trade, but not all of these policies or promises during campaigning will come to bear in an administration, he says.
There’s also another story unfolding in real-time that is casting all sorts of unknowns on the current global economic situation, says Townsend. All eyes are on China, China’s economy, and the U.S.-China relationship, but what does China even look like in 24 to 36 months? What about in five years? That economy could be headed for stagflation, or the way of Japan possibly, raising a huge (or yuge, as the president-elect would say it) question mark on the value of the Chinese market in the medium term.
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