Caught unawares, Donald Trump’s mantra to make America great again has finally paid off, leaving investors stunned with their ‘portfolios’ in their hands.
The US presidential campaign filled with media shocks mostly against Trump led investors to position themselves for a Hillary win. But as the result have it, in Trump’s words, “wrong”. Investors have thus resorted to seeking safe-haven assets, weighing down oil prices.
The oil market on Wednesday tumbled, with global markets in a blitz akin to the reactions to the Brexit vote. Futures market for crude picked up spurred by increased trade in Europe and Asia. Brent futures on the other hand were down 1.06 percent at $45.56 a barrel.
The logic is simple, the fear of a downgrade in growth forecasts premised on investor uncertainty essentially weakens the demand for commodities like oil. Russia meanwhile is expected to increase oil production, going by the word s of Kirill Molodtsov, Russian Deputy Energy Minister. The Kremlin is keen on keeping its stake in the global oil stake currently at 12 percent.
Exports from Iran are expected to dip 7.5 percent to 2.37 million bpd in November on account of low seasonal demands from Europe. This comes after its post-sanctions rally.
The gold market on the other hand which is a go-to alternative for investors in times of economic risk reacted inversely. The precious metal jumped 5 percent on Wednesday, translating to its strongest in six weeks and largest single-day gain since June 24. It reacted similarly to the Brexit decision rising 8 percent. Spot gold rose 4.9 percent to $1,337.40 an ounce, its strongest since Sept. 27.
As for the green back, it reacted by sliding steeply against a bevy of other major currencies. The Peso which was already linked to Donald Trump rallies and remarks went into near free fall.
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