Making money: what the experts think

Trump wave

Wall Street is still celebrating the US election, said Alex Ralph in The Times. It rode the “Trump wave” to new heights this week: all three of America’s leading indices finished at record highs on Monday, with the Dow Jones industrial average “smashing through the 19,000 mark for first time” as investors savoured the prospect of a fiscal stimulus. Investors are focusing on the positives rather than on negatives such as the threat of protectionism, said Jpmorgan analyst Mislav Matejka. “The market is not factoring in the bad stuff.” The surge has lifted equities globally, but a record amount of cash has been flowing into US stock funds, said the FT. According to data from EPFR, more than $30bn was invested in the week after the election, contrasting with the sell-off in bond markets, where more than $18.1bn was pulled from funds – the “second-biggest weekly redemption since EPFR began tracking the data”.

Commodities comeback

After a prolonged spell in the wilderness, commodity prices are also ticking up, said The Economist. Trump’s election victory “pushed up prices of copper at their fastest rate in five years, and sent iron ore prices to two-year highs close to $80/tonne”. But industry big guns such as BHP Billiton and Rio Tinto aren’t convinced the rally has legs. Trump’s plan to splurge on American infrastructure may boost demand for copper and steel at home, but his “America First” policy on trade could “hit demand for metals in China, which consumes more than six times as much copper as America does”.

Whither gold?

The election of “a political neophyte with questionable temperament” was briefly “a sweet moment for gold”, which shot up 4% immediately after the result, said the FT. But gold bulls predicting a stampede into safe havens were “wrong-footed” by bets on higher inflation and a surging dollar – and the price has since slumped to a six-month low. Hope may yet be in sight if attention switches back to geopolitical risks: notably, Italy’s imminent constitutional vote and the spate of European elections next year. As Jim Luke of Schroders points out, investors are currently “ignoring the possibly destabilising impacts of a populist earthquake in Europe”.