To many Americans, the prospect of a Trump presidency was unthinkable. Perhaps even laughable. However, last week, that unthinkable scenario became reality. Few, if any, gave him a chance when he announced his candidacy last year. Even when he thinned the Republican field and eventually gained their nomination, many distanced themselves from him, seemingly giving him no chance whatsoever. 

However, accusations of racism, sexism and a whole host of other problems never did his campaign any harm, and over half of American voters chose him over Mrs Clinton. So, how did he win? And how have the markets reacted to a Trump presidency? In this post, we take a look.

How Trump Upset The Odds

Ronald Reagan once promised to “make America great again”, but Donald Trump took it a step further, making it his campaign slogan. In doing so, he blended optimism and pessimism. He played on the fears of ‘average Americans’, all while providing them with hope.

Trump appealed straight to the heart of many Americans, giving them a reason to vote. In a country that’s as patriotic as America, this always has the hallmarks of a successful strategy. His message was simple and from the heart, and a number of Americans took it to their hearts, too.

As a candidate, he was incredibly ill-disciplined. He alienated women, Muslims, Mexicans, disabled people and African Americans. Many thought that this would leave him with no path to the presidency, with minorities rallying behind Mrs Clinton. However, instead, white votes powered Mr Trump to the presidency, stoked by fears about immigration. In addition, minorities failed to get behind Mrs Clinton, ultimately leaving her with no path instead.

However, the biggest factor that led to Trump upsetting the odds was the protest vote, flamed by the echoes with Brexit in the UK. As Michael Moore said when he spoke to NBC in October: “Across the midwest, across the Rustbelt, I understand why a lot of people are angry. And they see Donald Trump as their human Molotov cocktail that they get to go into the voting booth on November 8 and throw him into our political system. I think they love the idea of blowing up the system.”

Finally though, the weaknesses of his opponent simply cannot be underestimated. If Trump was an anti-establishment vote, his opponent could not have been more of an establishment candidate. After all, she was the wife of a former president, had served as Secretary of State and was running to succeed a two term Democrat. If there was a sense of optimism around Barack Obama in 2008, the opposite was the case for Mrs Clinton. After all, Donald Trump’s personal approval ratings were bad, but Mrs Clinton’s were even worse.

She may have been experienced, but in contrast with Mr Trump who had never been involved in politics, she also had a considerable amount of baggage. Most importantly, this included an FBI investigations into her use of a private email server, something Donald Trump was able to capitalise on, turning the public against her.

Ultimately, Mr Trump’s outsider status, combined with a public’s desire for change when he came up against an establishment candidate meant that he crept over the line in a vote where many chose the lesser of two evils.

How The Markets Reacted

If Trump’s campaign aimed to echo Britain’s Brexit vote, then the market reaction certainly followed suit, as stocks plummeted in value as the vote was announced. However, after an initial plunge, which many expected, the markets recovered and then showed solid gains.

The price of shares and bonds violently whiplashed over the course of Friday as the results became clear. However, while shock and outrage were certainly clearly on, cautious optimism ultimately prevailed. Much of this is likely to be because of Mr Trump’s business background. Many are also hoping that he will be less divisive now that the campaign has drawn to a close.

Many investors who had banked on a Clinton victory began a process of contingency, businesses and homeowners began to wonder what this would mean for the economy. At one stage on Friday morning, the FTSE 100 had dropped by as much as 146.8 points, but it recovered throughout the day, ultimately closing up 68.71 points. This was a rally that was mirrored in both America and Europe.

In America, the Dow Jones Industrial Average had plunged by as much as 800 points on Friday morning but, by the end of the trading day, the benchmark index closed up 1.4 per cent, which is only 0.25 points off its record high level. Likewise, on Friday, the Standard & Poor’s 500 closed up 1.1 per cent. However, this doesn’t mean that gains were universal, with the Mexican peso falling 12 per cent.

Although not too much can be read into the short term volatility that we’ve witnessed over the past couple of days, the coming weeks could be crucial. After all, in the stocks market especially, the next two weeks will probably reveal how well the stock will perform in the coming year.