Today the market update will be a little different than usual, as obviously the fallout from the US Election is what drove the markets, and the drive the markets it did!
When the results started to come in it was obvious that Trump was doing better than many expected, and this immediately had the expected effect in such that the USD/MXN moved sharply up, alongside gold. The S&P 500 started to drop as did the USD/JPY.
Once it became clear that Trump had won the key swing states of Florida, Ohio and North Carolina and was ahead in other states such as Wisconsin and Michigan, he was headed to win the election and the moves which started were only reinforced, and in a big way. The main instruments reached key support/resistance levels before making a U-turn.
This turnaround came right as Trump held his victory speech in which he sounded much more reconciliatory than many thought and this was seen as a sign that perhaps much of his rhetoric during the campaign was just that, and that his policies would not be as extreme as some would have feared.
As we could expect, the sectors that benefited the most were the pharmaceutical industry as well as the defense industry.
Below you will be able to see the instruments which reached some key support/resistance levels before seeing a sharp reversal.
Currencies
USD/JPY
GBP/USD – remained finding support on the downwards trend line.
USD/MXN – reached an all-time high and reached well over the 20 level as expected.
Indices
S&P 500
Commodities
Gold
Oil – it will be interesting to see how this will develop. Trump is for fracking and also for increased US production so that should drive oil lower. On the other hand, he is against the Iran deal that was reached and tensions around this or with other countries in the Middle East could cause oil to move up.
Inventories were higher than expected, albeit lower than the API data, but production increased quite a bit.