As markets digest the election result, we can likely expect some market volatility. As the election was tightening and it was looking more and more like a shock result, markets began to sell off in a big way.  Markets bottomed-out when the race rested on a knife’s edge, then rallied later in the day when the result was all but confirmed as the sell off presented some buying opportunities.

Markets also likely rallied due to the fact that the Republicans have taken control of the House and the Senate, meaning that the new President will be able to implement policies a lot easier now. The previous President had to deal with a hostile Republican House, which meant it was a lot harder to implement policies, leading to gridlock on many fronts. Trump will now be able to provide fiscal stimulus to the economy in the way of policy changes, meaning that economic stimulus is not just left up to the Fed Reserve and monetary policy anymore. This will mean that the Fed will not feel the pressure of being the sole driver of economic growth.

On the other hand, traders need to be somewhat wary that the markets have been rallying for most of the year. This means that there’s a possibility of a market pullback into the future as no rally lasts forever and markets become overvalued.

On the announcement front, the US is releasing some data in the early hours of tomorrow morning. They are releasing their Federal Budget Balance figures and Unemployment Claims. Fed Reserve Member James Bullard is also scheduled to speak as well. This could be quite an important speech as it is the first speech from a central bank representative since the election. It will be interesting to note what is said and what language is used as it could point to the readiness of the Fed Reserve to work with the new President, particularly since Trump has been quite critical of the central bank in the past.

Europe is releasing French Industrial Production, French Prelim Non-Farm Payrolls and Italian Industrial Production data. Industrial Production figures are important as they reflect the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. Non-Farm Payrolls reflect the strength of the labour/jobs market.

Elsewhere, Japan is releasing Prelim Machine Tool Orders data while Canada are releasing NHPI (New House Price Index) figures.