Market Quote: Trump Wins, Investors React
Author: The editor's desk
November 7, 2024
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
Trumped Up
The initial cross-asset reaction to Donald Trump’s victory seems to suggest investors believe the U.S. economy could benefit from potential deregulatory policies as well as expansionary fiscal stimulus in the next four years. Many investors were already pricing in some of this optimism, but the election results have super-charged these moves.
Moreover, a steeper U.S. Treasury yield curve, higher U.S. bond yields, pro-cyclical sectoral leadership and tighter credit spreads are symptomatic of a reflationary resurgence that could be positive for riskier asset classes going forward.
Still, it is imperative that active managers like us stay disciplined in our approach by continuing to embrace opportunities that are supported by strong underlying fundamentals, while keeping away from “weak” opportunities that are likely to fade over time.
Tariff-ied
Global financial markets were extremely active the day after Donald Trump won the U.S. presidential election. One of the biggest moves was the rallying U.S. dollar, which vastly outperformed most other major global currencies, likely because Trump seems set to place significant tariffs on U.S. imports from several countries, not just China.
Of course, U.S. stock markets also soared – with gains in U.S. Financials and Industrials particularly notable – and so too did Bitcoin and other cryptocurrencies that are viewed positively by the U.S. President-elect. Although this reaction may make sense to some when looking at the potential policies of the Trump administration, the immediate magnitude of the moves may come as a surprise to others. After the dust settles on this noteworthy event, we believe it is important to remain focused on fundamentals and actual policies that may help or hinder certain areas of global financial markets.
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The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
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About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
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