(AP) – One reason stock markets have rallied off earlier lows is an anticipated boost from U.S. fiscal policy when President-elect Donald Trump enters the White House in January.
Trump and Congressional Republicans, who won both the House of Representatives and the Senate, have indicated a desire to push through large tax cuts, enact corporate tax reforms and spend on infrastructure projects.
TRUMP’S CONCILIATORY SPEECH HELPS SOOTHE MARKET CONCERNS
Conciliatory comments from U.S. President-elect Donald Trump in the aftermath of his stunning victory over Hillary Clinton helped global stock markets erase a large chunk of their earlier losses Wednesday.
Though uncertainty remains over Trump’s trade, immigration and geopolitical policies, investors appeared somewhat soothed by his victory speech, in which he praised Clinton and urged Americans to “come together as one united people” after a deeply divisive campaign.
In Europe, Germany’s DAX was down 0.7 percent at 10,408 while the FTSE 100 index of leading British shares was 0.1 percent lower at 6,838. U.S. stocks are expected to open lower, too, though by far less than earlier predicted. Dow futures are 1.7 percent lower at 17,974 while the broader S&P 500 futures were down 1.8 percent at 2,097.
GERMAN INDUSTRY CALLS FOR US TO STAY OPEN
Germany’s main business lobby group is calling for President-elect Donald Trump to refrain from isolating the U.S. and warning of a negative impact on the global economy if uncertainty persists.
The head of the Federation of German Industries, Ulrich Grillo, said Wednesday that the U.S. must continue to back open markets because “anything else would be poison for the U.S. economy.”
Grillo said in a statement: “The uncertainty in the economy is huge. Donald Trump would be well advised not to seal off the U.S. economy from the world. Otherwise, the lack of clarity about the future course will lead to significant negative effects for the world economy.”
The United States was the single biggest trading partner last year for Germany, which has Europe’s biggest economy.
TRUMP VICTORY INCREASES UNCERTAINTIES FOR GLOBAL ECONOMY
The election of Donald Trump as U.S. president creates new uncertainties for the global economy, say investors and economists, who see him as a reckless novice who might disrupt trade at a time when growth is already fragile.
Trump’s campaign was marked by fiery anti-foreign rhetoric and promises to tear up trade deals, restrict immigration and lock up political rivals. He was more conciliatory in his victory speech, arguing he would seek good relations with other countries.
But Trump’s shifting and radical positions on key issues and lack of details leave many uncertain about the direction of the world’s biggest economy and market.
“We simply can’t know what type of President Trump will be,” said Paul Ashworth, chief U.S. economist for Capital Economics, in a report.
“Will he be the demagogue from the campaign trail, who threatened to lock up his political opponents, punish the media, build border walls and start a global trade war?” said Ashford. “Or is he capable of becoming a statesmanlike figure who leads in a more measured manner?”
Due to such uncertainty, risks to global growth will rise as companies wait to see what Washington does, said South Korea’s finance minister, Yoo Il-ho, according to a government statement.