POLICY DETAILS AWAITED
Trump’s Republican Party also secured the Senate and was making gains in the House of Representatives, potentially making it easier for the president to legislate his proposals and push through key appointments.
Markets “have priced in a pretty strong mandate for the Republicans and are biasing toward most of the Trump trades,” said Scott Chronert, US equity strategist at Citi.
“Policy details will be important for here as the market focus seems to be putting more emphasis on deregulation, tax cuts, and a more business-friendly backdrop.”
Wall Street lenders JPMorgan Chase, Bank of America and Goldman Sachs jumped between 8 per cent and 12 per cent on prospects of improving domestic investment, looser regulations and more deals.
“There is an expectation that the regulatory landscape will ease under the Trump administration” and that is helping financials’ shares, said David Ellison, portfolio manager at Hennessy Funds, which holds several bank stocks.
Greg Hertrich, head of US depository strategies at Nomura, said one of the biggest questions is how Basel III, a set of global banking regulations, will be implemented by the next administration.
The latest version of the proposal called for a 9 per cent rise in banks’ capital. “Whether the banks will need 9 per cent, 6 per cent, 4 per cent or 0 per cent more capital creates very different scenarios,” he said.
Hertrich also noted that the proposal could speed up US bank mergers.
