Donald Trump is now President of the United States of America (POTUS) and as such has inherited @POTUS on Twitter. It’s an influential position with an influential Twitter account. The question is will Trump’s presence on Twitter be dangerous for the markets?
Donald Trump ventured into the Twittersphere as a millionaire tycoon and has never been a stranger to controversy. His aggressive, personal and sometimes bizarre tweets have ranged from personal insults like those:
Right through to weighing in on international issues which would seem to be beyond his field of knowledge as below:
We can probably all agree that Trump’s tweets are at best hilarious and at worst downright scary but what about the financial markets? can a tweet from @POTUS really affect them?
If you’re looking for an example of Trump’s ability to influence public markets with 140 characters, look no further than the infamous pre-Christmas tweet that the United States must “expand its nuclear capability until such time as the world comes to its senses regarding nukes.” Which sent Uranium Resources, Inc. (URRE) and Uranium Energy Corp. (UEC) shares up by as much as 31% and 13% respectively.
This is not an Isolated incident. The President took on twitter to threatened a nondescript tax on the Toyota if it moved some of its production to Mexico as seen below:
In response, the stock dipped roughly $0.77 instantaneously on the NYSE. Despite the fact that it was low impact it makes the point about the potential cause and effect relationship between Trump’s tweets and the financial markets.
On December 6, Trump complained about the allegedly high costs of building a new Air Force One and tweeted “Cancel Order!”
That tweet, sent before markets opened for the day, sent Boeing’s stock price down by 1% in pre-market trading.
There may be no doubt that an influential Presidential account may move markets. Those who remember the fake hack of the Associated Press Twitter account in 2013 will remember that that it caused the Dow to drop 150 points.
In answer to the question Is Trump dangerous for the markets the answer may be; quite possibly. Traders know that volatility may move the markets and this may present great opportunity or great loss.
One thing’s for sure, traders may want to be on alert for the next four years and should not underestimate the power of a tweet.
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