All over November was characterized by the result of the US-American presidential election. Similar to results of Brexit polls, also for those election results were different to polls. Nevertheless after revealing the results the sentiment on the stock exchange adjusted immediately to the new situation. Most importantly likely negative effects of a Trump-Presidency were eclipsed. The hope for massive cuts in taxes, deregulation, strongly growing spending for infrastructure and security and a hike in inflation combined with increasing interest quickened the markets. The pleasing rally in stock prices helped the S&P500 to reach a new All Time high on 21st of November 2016. Following this the market continued in this direction. However this development wasn't carried by the broad market, but by a few very benefiting sectors. Industrials, financials, telecoms and materials were sought after most. Gold as a sign of increasing confidence was reduced one more time. Through that, the decline which started in the mid of July has accelerated further.
In Austria the US-elections also had effects. Here the topic sector rotation was meaningful as well. Stocks which have not been in focus of investors for quite a while did a comeback. Voestalpine AG, Wienerberger AG and Zumtobel Group AG contributed to ATX performance. Also the insurance and banking sector could continue recovering. Increasing expectations for interest already priced in some positive developments. On the other side you could find companies from the property sector. Property stocks, especially residential stocks, were reduced. This asset class could get out of favor in a period of rising fixed income yields.
The last month showed one more time, after the Brexit-Vote, that results of political events are hard to assess. Consequences afterwards often are interpreted in another way compared to beforehand expectations.
Author:
Bernhard Ruttenstorfer
Senior Fund Manager
ERSTE-SPARINVEST KAG
30 November 2016
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.