/ PROFIT-TAKING /
Amid the euphoria of a bull run , it is often difficult to see what will cause the optimism to end
economic stimulus have aided the rotation towards more economically sensitive areas .
Haynes adds the advent of “ Trumponomics ” has resulted in a rally for areas that will benefit from stronger US economic growth , especially smaller companies , with the Russell 2000 index up 10 per cent since 8 November .
Two sectors in particular spiked on Trump ’ s election triumph : financials and energy . The latter had spent a significant period in the doldrums as commodity prices , in particular oil , slumped on concerns over global growth . Trump ’ s rhetoric while on the campaign trail prompted speculation of huge infrastructure spending and a boost to US growth , both of which are good for energy stocks . The sector has been further supported by a strong rally in oil .
Financials rose on the expectation of deregulation , increased borrowing and the inflationary impact of fiscal stimulus on the economy , with the likely side effect of higher interest rates also helping to boost profit margins .
US pharma and biotech stocks also received a Trump boost as the risk of Clinton-led drug price controls diminished .
WHAT COULD GO WRONG ? However , amid the euphoria of a bull run , it is often difficult to see what will cause the optimism to end and while the Brexit and Trump rallies are interlinked , both carry separate risks that could quickly wipe out recent gains .
For example , Hollands says the Bank of England could be forced into a U-turn on its most recent rate-cut and abandon its quantitative easing programme at some point .
“ The economic data has repeatedly outperformed the gloomy predictions made in the run-up to the EU referendum and the immediate aftermath of the result and , significantly , growth in bank lending has been strong ,” he explained .
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