Market Volatility Following Trump Election
http://www.businessinsider.com/markets-reaction-to-election-results-2016-11
Stock markets are largely based off of aggregate valuations for pieces of a company. Last week once Trump won the U.S. Presidential Election, the world markets started to become more volatile. People were uncertain of what his economic policies would entail. As a result, worldwide, people began to take money out of more uncertain parts of the market and began buying commodities such as gold, and other rare metals. Alternatively, people also began to transfer money from the dollar to other currencies such as the yen and the pound that people seem to have more confidence in.
The entire valuations of currencies in markets is based on how much people trust the government. Bonds from the U.S. government have been being sold off because people no longer trust the government to maintain their current economic well-being. Once the bonds (the government’s debt) are sold they lose value, and as a result worldwide there have been 1 trillion dollars of loss of bond valuations.
Many other markets worldwide also took a plunge because of strong connections to the U.S. market. The lack of faith in the U.S. economy and the uncertainty around it has driven stock markets around round the world down by quite a few percentage points. Asian markets especially have been hit hard because of this aggregate thought, and their strong economic ties with the U.S.