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US presidential election

Donald Trump has been elected as the next president of the United States. What does this mean for the markets? Take a position with IG.

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The result

Donald Trump has been elected president of the United States, and the Republican party has regained control of the House of Representatives and the Senate. 

On 8 November, the former Apprentice star won the popular vote, and on 19 December he eased past the 270 electoral college votes needed to formalise his victory. On 20 January 2017, the new president and vice president will be sworn in.

Of course, this will just be the beginning, as Trump begins to enact his policies and global traders unpick what they mean for the markets at large.

A closer look at Congress

Almost as crucial as who won the presidency itself was who would take Congress.

Had Trump secured the presidency but faced a Democratic majority in either the House or the Senate, he would have been hamstrung by an unsympathetic audience. Like Obama before him, he would likely have struggled to pass his more sedate policies, let alone his dramatic ones.

All predictions suggested that the Democrats would take the Senate, and there had even been growing optimism that Trump’s Access Hollywood scandal would lead to their taking the House. This, alongside the anticipated Clinton presidency, suggested a smoother future for Democratic policy. 

But the predictions were wrong. 

Donald Trump secured the presidency, and the Republicans regained control of the House and the Senate – even picking up a few seats along the way. This means Trump will have an easier time when it comes to passing new bills than his predecessor, which could add to market uncertainty if he follows through on some of his more outlandish policies. 

Of course, some of those policies may struggle to see the light of day regardless of congressional affiliation, simply due to budgetary restrictions. Likewise, motions that contravene Republican convention are unlikely to pass, as the GOP tries to maintain the tenets that have been upset by their nominee over the past few months. 

But certain areas which have never been popular among Republicans – Obamacare, funding for certain departments and initiatives – could well face swift dismantling. Trump’s determination to reduce domestic corporate taxes and inflict greater trade tariffs upon companies that have left US soil could also take effect sooner rather than later, a move which may see stocks suffer. 

For traders, this means major changes to US economic infrastructure and the uncertainty that comes with it. The Fed, too, is likely to have to react as a clean Republican sweep makes its mark, meaning closer attention than ever will be paid to future rate announcements and policy adjustments.

But even the possibility of a more amenable political landscape may be enough to see major indices and the dollar suffer. Whether or not Congress climbs on board with Trump’s stringent trade duties and debt-accelerating taxation policy, the very idea of it could be enough to keep markets in disarray for a long time to come.

How we got here

Having built a campaign upon incendiary promises, few expected Trump to gain the nomination of the GOP, let alone reach the Oval Office.

The first signs of success came in the primaries, when Trump’s popularity triggered speculation of a brokered convention. In reality, the Republican National Convention came to highlight just how vocal his support had become.

From then on, Trump’s campaign resisted every disappointment and scandal. His first debate, in which he focused more on mudslinging than policy, was widely seen to prove how far behind his rival he was. Faring only marginally better in the subsequent debates, the leaked Access Hollywood tape would seem to create a polling deficit too significant to bridge.

The new president and his policies

Trump will be keen to gain traction on major fiscal changes as soon as he gets into office, including reduced Wall Street regulation, simplified tax brackets and scaled-down corporate duties. 

To help give you a clearer understanding of what Trump is proposing, we’ve broken down his positions on tax, spending, trade and more, and looked at how they might affect the markets.

More on Trump's policies

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2016 financial events

The US presidential election was one of the biggest market-moving events of 2016. Learn more about other key financial events in 2016.