the performance of The Dow Jones, who finished 20.068 points, has been hailed by the new american president of a “Great!” on one of its Twitter accounts.
The flagship index of Wall Street had already climbed in November after the election unexpectedly on the republican candidate, surprising analysts, before marking a pause in the beginning of the year.
“A decline after the victory of Mr. Trump I would not be surprised. I thought (…) that the market would drop because he does not like surprises“, has set before Sam Stovall of CFRA.
investors were now committed to this increase based on expectations of fiscal stimulus, with higher infrastructure spending and tax cuts but also decrease the regulations, seen as a brake on the growth on Wall Street.
But after his strong initial surge, the Dow Jones had gone down, approaching several times the 20,000 points these past few weeks, but without reaching the crossing.
The risk of seeing the political promises do not stand the test of the facts had encouraged the majority of analysts to predict, with more precautions this time, in a decline of the New York stock Exchange after the inauguration of new american president.
“in recent times, with the investiture, many investors thought that there would be a decline of the shares, on the topic ” Buy the election, sell to the investiture+“, summary Sam Stovall.
But the fear of not to participate in a new upward movement has prevailed, pushing the market operators to purchase, said Patrick O’hare of Briefing in a note.
Even if the New York stock Exchange was hesitant just after the inauguration, she went in the net increase after the signing Tuesday of decrees re-launching the construction of two pipelines controversial.
This decision has reassured on the ability of the new president to act, and to remove what Wall Street considers as impediments to the growth of the u.s. economy and corporate profits.
- Risk protectionist –
In the immediate term, the markets take little account of the risks protectionist with the emphasis placed by the new president on “America first” during his inauguration speech and his willingness to review the relations of the United States with its trading partners.
from the beginning of his presidency, Mr. Trump has kept his election promise to withdraw the United States from the treaty of free trade trans-pacific (TPP), a hotly negotiated by his predecessor, Barack Obama.
Now, the renegotiation of the free trade Agreement of north America (Nafta), that Donald Trump has demanded of Canada and Mexico, and its threats to impose a tax on imports, in particular in the automotive, are at the centre of questions.
“This is wild. He has been in real estate his entire life so he knows compromise. The more you put it on the table, the more you have of these strengths in your game“, said J. J. Kinahan, TD Ameritrade.
beyond The high expectations regarding policy decisions, the markets have found support in a u.s. economy that still shows signs of strength and on the results of companies that tend to improve.
“We may see a small pullback but the trend will not be down sharply“, has predicted Sam Stovall.
For u.s. monetary policy, the Dow Jones has, without too many difficulties overcome in December, the second increase of the rate of the american central bank in a decade.
in the longer term, the continuation of the rate hike, if it tends to support the financial values, the weight of which is crucial in the Dow Jones, enabling them to increase their margins, could impede u.s. growth and deplete the main fuel of stock markets in recent years: bond yields low.
“at a certain level, higher yields, lower Stock market, but a return to the good 10-year Treasury of 3% is rather low on the long-term“, has qualified Karl Haeling, who believed that Wall Street had still a margin of progression on the first half of the year 2017.