8 Days Later: Trump effect on financial markets

trump-financial markets.jpgIt's been 8 days since the Presidential Election and financial markets have had quite a wild ride. On election night, S&P futures traded down limit of -5%. It appeared that markets would react strongly to the downside much like after the Brexit vote. However, the markets quickly digested the surprising Trump decision and markets have traded sharply higher on hopes that Trump's policies will be inflationary and stimulate the economy. While it is too early to tell what he will be able to accomplish, financial markets have wagered some early bets on who the winners and losers will be. The early winner is financial stocks. Trump is widely expected to roll back the regulations of Dodd-Frank which were enacted after the financial crisis of 2008. Financials are also benefiting from the rise in long term interest rates which benefits their net interest margin and equals larger profits. The sharp move in interest rates caused headaches for high dividend stocks which were the hardest hit with REITs, consumer staples and utilities all in the red.

    PRICE  
  TICKER PER SHR Price % Chg
  SYMBOL 11/16/16 Since Election Day
Indices      
ISHARES RUSSELL 2000 IWM 129.54 9%
S&P MIDCAP DEP RECPT MDY 290.48 5%
TOKYO NIKKEI 225 AVG TNAI 17862.21 4%
SPDR DJ INDU AVG DIA 188.98 3%
S&P 500 SPX 2176.94 2%
FRANKFURT DAX INDEX FSEI 10663.87 2%
POWERSHARES QQQ TR 1 QQQ 116.91 0%
ISHARES MSCI EAFE IX EFA 56.39 -2%
ISHS MSCI EMRG MKTS EEM 34.70 -7%
       
Sector      
SPDR FIN'L INDEX XLF 21.86 9%
SPDR INDUSTRIAL IDX XLI 61.19 5%
SPDR ENERGY INDEX XLE 71.32 3%
SPDR HEALTH CARE SEL XLV 70.17 3%
SPDR MATERIALS SELCT XLB 48.37 2%
SPDR CONSMR DISC SEL XLY 80.48 2%
SPDR TECHNOLOGY IDX XLK 47.10 -1%
REAL EST S SPDR FUND XLRE 29.93 -2%
SPDR CONSUMER STAP XLP 50.77 -4%
SPDR UTILITIES INDEX XLU 46.42 -6%
       
Fixed Income      
ISHARES 1-3YR TRSRY SHY 84.62 0%
SPDR HIGH YIELD BOND JNK 35.72 -1%
ISHARES 3-7YR TRSRY IEI 123.55 -1%
ISHARES IBOXX $INVST LQD 118.00 -2%
ISHARES 20+YR TRSRY TLT 123.01 -5%
       
Commodities      
US BRENT OIL BNO 13.30 2%
ELEMENTS RGRS AGRLTR RJA 6.29 -1%
SPDR GOLD TRUST GLD 116.77 -4%
       
Currency      
U.S. DOLLAR INDEX TXA 100.30 2%
CHINESE YUAN CY.FX 14.54 -1%
EURO ED.FX 107.08 -3%
JAPANESE YEN JY.FX 92.07 -3%
MEXICAN NEW PESO MP.FX 4.95 -10%

Trump effect on the Dow

In the table below, you can see the winners and losers of the Dow 30. As stated previously, financials are the clear winners with Goldman Sachs and JP Morgan up over 11% each. Caterpillar is up sharply on prospects of $1 trillion infrastructure spend and maybe a Great Wall of USA on the Mexican border. The laggards are multinational companies that are hurt by rising dollar and interest rates. Coca-Cola and Procter & Gamble were down the most over the last week.

    PRICE  
  TICKER PER SHR Price % Chg
  SYMBOL 11/16/16 Since Election Day
Dow 30      
GOLDMAN SACHS GROUP GS 206.26 13%
JPMORGAN CHASE & CO JPM 77.40 11%
CATERPILLAR CAT 93.35 10%
AMERICAN EXPRESS AXP 71.68 7%
PFIZER PFE 31.96 7%
UNITEDHEALTH GROUP UNH 151.50 6%
DISNEY (WALT) DIS 99.12 5%
GENERAL ELECTRIC GE 30.74 4%
MCDONALD'S MCD 119.21 4%
MERCK & CO. MRK 62.63 4%
UNITED TECHNOLOGIES UTX 106.96 3%
TRAVELERS COS (THE) TRV 111.35 3%
BOEING BA 146.44 3%
INT'L BUSINESS MACH IBM 159.29 3%
WAL-MART STORES WMT 71.39 2%
CISCO SYSTEMS CSCO 31.57 2%
CHEVRON CVX 108.35 1%
HOME DEPOT HD 125.33 1%
VERIZON COMM VZ 47.93 1%
3M COMPANY MMM 172.01 1%
EXXON MOBIL XOM 85.75 1%
INTEL INTC 34.84 0%
DU PONT E I DE NEORS DD 68.88 -1%
JOHNSON & JOHNSON JNJ 116.36 -1%
NIKE INC 'B' NKE 50.68 -1%
APPLE AAPL 109.99 -1%
MICROSOFT MSFT 59.65 -1%
VISA V 80.08 -3%
COCA-COLA KO 41.26 -4%
PROCTER & GAMBLE PG 83.19 -5%

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About the Author: Chris Wang

Chris Wang

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