In many ways the US election was one of the biggest surprises in the market in years - both political and in the markets. While many had expected that a victory for Trump would spell uncertainty, the result has in stead given a positive input to the markets. This is especially seen for value and small cap shares, Sparinvest Chief Strategist David Bakkegaaard Karbøl writes in his monthly comment for December .
First of all, the result was surprising to most observers who had followed the polls, bookmakers' odds, models for the US electoral college’s vote distribution, statistical commentators’ websites and the many political analysts and celebrities who spoke out against Trump's chances of winning.
Secondly, the market’s reaction to the election was surprising. Before the election there was consensus that the political uncertainty Trump would bring as president would cause a major drop in the stock market. Interest rates and interest rate projections were also expected to fall, and reduced growth and a weaker dollar were expected.
With long-term yields soaring both before but especially after the election of Trump, this has naturally led to considerably greater returns, especially in the value factor.
Read the Monthly economic report here
Hear more about how the election affects markets in Sparinvest’s most recent video update, in which our Chief Strategist also offers his view on what stance investors should take.