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Blog | Did President Trump just play Santa Claus with the ASX200?

Andrew Hewison
Managing Director
19 Dec 2019

While some politically sensitive souls may be offended by my headline; the truth is Donald Trump may have just provided the news the share market needed to surge higher over Christmas.

Late last week we received news that the United States and China had struck a new 24-month trade deal, putting to bed the uncertainty over the impact of President Trump’s standoff with China.

The posturing between the United States and China was nothing more than political jockeying in order to reach a favourable outcome for the United States. Had both countries been stubborn enough to walk away from the table permanently the ramifications could have been dramatic. No doubt the President’s negotiating tactic is high risk, that I do not dispute. A complete breakdown in negotiations could have had a fundamental and negative impact on many industries and companies.

It has been proven that a market fall by 4% over two days off the back of a Donald Trump tweet, is a ridiculous overreaction. On November 28, 2019, the ASX200 hit a fresh all-time high of 6864 points, before falling by 4% to 6606 points on 4 December 2019.

With a trade deal now signed, at the time of writing, the market has essentially regained the lost territory and sits at around 6846 points. This potentially now paves the way for new highs to be achieved over the Christmas break, traditionally known as the ‘Santa rally’.

I reiterate the comments made in my December 5, blog, long-term investors should never concern themselves with short term noise and remember that quality companies will always perform according to their fundamentals over the long-term. To leave you with yet another Warren Buffet quote:

“Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years.”

Have a lovely Christmas everybody. Enjoy the time with friends and families and above all else, stay safe.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.