Stocks rise, gold falls after US presidential election

Stocks are green, gold is plummeting

The Vietnamese stock market (TTCK) closed yesterday's trading session in the green. The VN-Index increased by 15.52 points, equivalent to an increase of 1.25%, to 1,261.28 points; the HNX-Index increased by 2.91 points (1.29%) to 227.76 points and the UPCoM-Index added 0.87% to 92.71 points. The market's trading value also increased, reaching a total of nearly 15,869 billion VND, an increase of nearly 30% compared to the previous session. Not only Vietnam, the global stock market also had an exciting trading session.

For example, Japan's Nikkei 225 index closed up 2.61% to 39,480.67 points; Taiwan's Taiwan Taiex Index rose 0.48% to 23,217.38 points; Singapore's Straits Times Index added 0.6% to 3,602.99 points... Most European stock markets opened for trading (as of 6:00 p.m. on November 6, Vietnam time) and were also "green". The US stock market alone had a session filled with green on November 5 and futures indexes also recorded an increase, signaling that the trading session on November 6 (closing early this morning, November 7, Vietnam time) will also be positive.

On the contrary, by 4 p.m. yesterday, the world gold price fell to $2,724/ounce, $20 lower than the previous day. During the session, the price of the precious metal even plummeted to a low of $2,717/ounce. The gold price fell sharply after many days at a high of around $2,740 - $2,745/ounce. Profit-taking pressure also appeared when the gold price "turned around" and plummeted.

Stock market rises after Donald Trump wins US presidency

PHOTO: DAO NGOC THACH

The plunge in world precious metal prices has affected gold prices in Vietnam. Although the price of SJC gold bars remained at the buying price of VND87 million/tael and the selling price of VND89 million as in the first days of the week, gold rings in the market decreased sharply. Specifically, SJC bought 4-number-9 gold rings at VND86.4 million/tael and sold at VND87.9 million, down VND300,000 compared to the morning but down a total of VND600,000 compared to the previous day. Phu Nhuan Jewelry Joint Stock Company (PNJ) bought at VND87 million and sold at VND88.2 million, down VND300,000 - 400,000; Doji Group bought 87.3 million VND, sold 88.4 million VND, down 100,000 - 200,000 VND... Compared to the peak of 89.5 million VND/tael last week, each tael of gold ring has now "evaporated" more than 1.5 million VND. The opposite fluctuations of the stock market and gold prices are considered by many financial experts to be the market's reaction to Mr. Donald Trump's victory in the US presidential election.

According to financial investment expert Phan Dung Khanh, the increase in the US and Vietnamese stock markets after the above results was predicted. Similarly, for gold prices, investors have taken profits in the "sell when news comes out" style because expectations have been met. In addition, the high increase in the world USD price with the USD-Index at times reaching 105 points is also the reason for the decline in gold prices. "According to statistics from the World Gold Council, in the last 4 US presidential elections, gold prices have not fluctuated much in the short term.

Instead, the impact on gold prices will be medium and long term after the election ends. However, statistics from the World Gold Council also show that gold prices fluctuate up and down during each US presidential term. Accordingly, during the term of President George HW Bush (also known as Bush Sr., 1989 - 1993), gold prices decreased by 19%. During the term of President George W. Bush (Bush Jr., 2001 - 2009), gold prices increased by 215%. During the term of President Barack Obama (2009 - 2017), gold prices increased by 44% and in the last 3 presidential terms, gold prices have increased," Mr. Khanh cited.

Will gold continue to fall and stocks have many opportunities to rise?

Economist, Dr. Dinh The Hien analyzed the developments of the stock market in many places and the gold market in yesterday's session as short-term because these are the two markets that always react the fastest to all information, especially the results of the US presidential election with the victory of Mr. Donald Trump. This is also a long-term trend because in his previous term and expressing his upcoming decisions, Mr. Donald Trump always aimed to develop the US economy, making America strong again. However, despite always showing toughness, there were no military conflicts during his term.

Another important policy is that he always wants to limit the trade imbalance between the US and China as well as with many countries but still create conditions for both sides to benefit. Particularly for Vietnam, Mr. Trump's decision can create conditions for increased exports when the US economy grows higher but at the same time it also has to face the problem of this country wanting to limit the large trade deficit from Vietnam. At the same time, the flow of foreign investment (FDI) into Vietnam will continue to increase when foreign corporations and investors still do not want to concentrate in China to avoid risks in trade relations with the US. Particularly for the stock market, foreign investment flows cannot return immediately but may need about 6-7 months later.

"The Vietnamese stock market has many opportunities to accelerate, but this may not become clear until the middle of next year when foreign capital flows return more strongly. At the same time, capital flows from domestic investors will accelerate at that time. Therefore, in the next few months, the stock market may still fluctuate around the current level. As for gold prices, if there are no more military conflicts or current tensions decrease, there is no reason for them to increase again," said Dr. Dinh The Hien.

Sharing the same view, Mr. Phan Dung Khanh said that in the next few months, gold prices will have two scenarios. First, the precious metal will continue to increase but slow down and move sideways, making it difficult to increase sharply. Second, the scenario of a downward reversal. Currently, Mr. Khanh is leaning towards the first scenario. Meanwhile, the USD in the world is still on an upward trend. The US Federal Reserve (Fed) is considered an independent agency and the Fed's monetary policy continues to loosen and reduce interest rates. Although the Fed's interest rate reduction may be slow, other central banks are also reducing, so the USD is still stronger. When the USD increases, it will have a negative impact on gold prices while the stock market can benefit. The Vietnamese market is also somewhat affected by the US stock market, but not much. Currently, there are many positive factors for the domestic stock market, although they have not yet "absorbed" and need more time, but the long-term trend will increase more.

USD price increased

The world USD price increased sharply with the USD-Index reaching 105 points at times and reaching 104.93 points at 6:00 p.m. on November 6 (Vietnam time), up 1.6 points. In Vietnam, the central exchange rate between VND and USD announced by the State Bank was 24,258 VND, up 10 VND compared to the listed rate a day earlier. Applying a 5% band, the current USD exchange rate that commercial banks are allowed to trade is from 23,045 - 25,471 VND/USD. Specifically, the USD buying price at commercial banks increased from 20 - 50 VND such as Vietcombank buying by transfer to 25,170 VND; Eximbank buying at 25,130 VND; BIDV buying at 25,160 VND... while the selling price was all at the ceiling level of 25,470 VND.

Source: https://thanhnien.vn/chung-khoan-tang-vang-giam-sau-bau-cu-tong-thong-my-185241106224938418.htm