Wall Street caught wrong footed and stocks rally after Trump victory

Wall Street surprised us all, almost as much as Trumps victory and in a clean sweep with the Republicans not just winning the white house, but  the House & Senate as well, and that gave markets a boost.

The Dow Jones Industrial Average closed up 256 points while the S&P 500 index finished up by 1.1% and the Nasdaq Composite Index closed at 1.4%.

The market was wrong footed on the outcome and that helped to drive the market higher on a complete u-turn in the markets. Investors will still be digesting the victory, but Trump's intent to fuel spending and consumer confidence with tax cuts is a positive for stocks and his plans to reform the failing central-bank monetary policies of the Fed is a positive for the future also, while for the mean time, markets can expect more of the same easy money.

Elsewhere, US treasuries have had a rollercoaster 24 hours, explained analysts at Westpac," The 10yr yield initially rising to 1.89% on expectation of a Clinton win, then a risk-averse plunge to 1.71% as a Trump victory looked likely instead, and then a rise to 2.05% overnight as markets adopted a growth-positive view. The 2yr yield similarly reversed its earlier plunge to 0.71%, now at 0.89%.

The market’s outlook on the Fed fund similarly flip-flopped, from a 30% chance of a Dec rate hike to almost 80% now. The revised inflationary thoughts of markets are most apparent via the US 10yr break-even inflation indicator, which rose from 1.70% to 1.87% - a 16-month high."

Watch: Trump trumps markets