Fluctuation in equity markets prompted by Trump’s surprise victory

After an initial selloff prompted by the surprise of Trump’s win wore off, European stocks on Wednesday were boosted by industries seen benefiting from the outcome. Heavyweights such as banks and health-care shares rallied, as did miners and construction. The Republican’s promises to increase public spending also spurred bets for higher inflation, dragging down bond-proxy sectors such as utilities and real estate. The Stoxx 600 is up 2.7 percent this week.

A gauge of Stoxx 600 lenders declined from its highest level in almost eight months. Banks surged 7.8 percent in the past four days on bets of higher inflation leading to improved profitability, and an easing of financial rules.

Europe’s banks, which until recently were the year’s worst-performing sector in the Stoxx Europe 600 Index, are bouncing back as bond yields are rebounding from their summer lows, easing concerns over profitability.

The Stoxx 600 has rebounded 4.3 percent in four days, after completing a streak of 11 days with no advances, its longest since 1994. Economic data are beating forecasts, and analysts see a revival of profit growth for Stoxx 600 companies in the next three years. Fund managers began sending money to Europe’s equity funds again, after a record 38 weeks of outflows, a Bank of America Corp. report citing EPFR Global data showed last week.

Markets in the euro region potentially have turbulent period ahead with an Italian constitutional referendum in December and elections in France, Germany and the Netherlands next year that may kick out ruling parties or coalitions and overturn economic policies.

Sterling has climbed against all of its 31 major peers since last Friday. It’s the surprise winner during the week of Donald Trump’s electoral upset in the U.S. that threw markets into turmoil as traders reappraised populist movements and inflation.

This article was compiled byValletta Fund Management Limited, a member of the BOV Group.Valletta Fund Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000 Freephone: 80072344. E-mail: infovfm@bov.com. Website: www.vfm.com.mt. Valletta Fund Management Limited is licensed by the MFSA.