American and Canadian stocks are surging post-election

The U.S. and Canadian stock indices rallied to record highs this week following news of a second Donald Trump presidency.

On Wednesday, November 6, right after Trump was called to win the election, the Dow Jones logged its best day in two years. Since November 4, the S&P 500 index has grown by over 5% to its all-time highs above 6,000 points.

The post-election enthusiasm is to a large extent due to investors’ reaction to a quick election result and partly a response to Trump’s proposed economic policies, John Bai, Northeastern professor of finance told Northeastern Global News.

“The number one rule in the stock market is that the stock market doesn’t like uncertainty,” Bai said. “But it does like the resolution of uncertainty.”

This week, the latest inflation update, which raised hopes for another interest rate cut next month, supported the U.S. stocks. “Bang in-line core inflation leaves the Fed on track to cut rates in December,” according to Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management.

The Fed began cutting interest rates from their two-decade high in September to offer support for the job market. It cut again earlier this month, and traders now see an improved probability of roughly 82% that it will cut a third time in roughly a month, according to data from CME Group.

According to prior forecasts published by the Fed rates could continue to go down through next year. At the same time, Donald Trump’s preference for lower taxes, higher tariffs and less regulation could lead to higher U.S. government debt and inflation, along with faster economic growth. This could prevent the plans for further rate cuts to materialize.

The main Canadian S&P/TSX Composite index has also grown to all-time highs and briefly crossed the 25,000 level on November 12. Currently, gains in the IT, Consumer Staples and Mining sectors are supporting the Canadian shares.

Michael Zienchuk, MBA, CIM
Investment Advisor, Credential Securities Inc.
Manager, Wealth Strategies Group
Ukrainian Credit Union
416-763-5575 x204
[email protected]
www.ukrainiancu.com

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