Donald Trump's victory in the United States presidential elections initially sent shockwaves through markets around the world but stocks later made a comeback and have been rallying since then. While some analysts have been calling this a knee-jerk reaction others simply feel that investors will wait and watch for clues from Mr. Trump's presidency. "Short term, financial markets should learn a lesson of Brexit – which is that even political earthquakes with profound economic consequences do not change the world overnight, or in a predictable fashion," Stephanie Flanders, chief European market strategist at JPMorgan Asset Management told CNBC via email. "In the short-term, the best thing that most investors can do will be to sit tight and look for clues from Trump's first few weeks."



Republican president-elect Donald Trump delivers his acceptance speech during his election night event at the New York Hilton Midtown in the early morning hours of November 9, 2016 in New York City. Getty Images

However, some analysts have told CNBC that the markets will soon move away from the Trump Trade and focus on the events in Italy as the risk event for markets globally. "The upcoming Italian referendum this December may create volatility across markets as the year draws to a close," Maria Paola Toschi, global market strategist at JP Morgan Asset Management told CNBC via email. She further added that the referendum on Senate reform is considered a political test for Italy. "A victory of yes could reinforce the empowerment of the current coalition on an ambitious program of reforms. The victory of no could open a period of uncertainty on the political stability of the current coalition that has been always strongly committed on reforms."

Impact on Europe?

Many analysts have warned that the result of the Italian referendum could have global implications. A defeat in the referendum for Italy could lead to social turmoil in other countries that are already facing a strong resistance to changes with elections across Europe that will take place next year. At present, any Italian law needs to be approved by both the Chamber of Deputies and the Senate, often resulting in delays in effecting new laws and reforms. However on December 4, the Italian public will get to decide whether they want to stick with the old or shake things up, by restructuring the legislative process by effectively reducing the second chamber's power. Other uncertainties around the referendum involve the country's Prime Minister, Matteo Renzi who has said in previous months that he would resign and abandon politics if the constitutional reforms were not passed. "There is certainly a lot of interest on the upcoming Italian referendum and what its result may mean for the future of Europe's political stability. Although political events can create volatility in the short term, it is important for investors to focus on the fundamentals and long term drivers of the markets," JP Morgan's Toschi told CNBC.



However, some analysts think the Italian referendum may not get as much coverage. Ana Thaker, a market economist at PhillipCapital UK says the build-up to the Italian referendum is unlikely to be as significant as the U.S. election. Thaker however warns that it should not be underestimated, adding that it could be as "significant as Brexit. Britain's decision to leave the European Union was the first sign of trouble in the union, if Italy decides to leave, it is confirmation that the union is in trouble and could spark a long-term market rout which European equities would suffer from the most." The Italian government bond yields meanwhile have hit their highest level in over a year in the run-up to a ratings review and a planned auction while as investors look to the upcoming constitutional referendum. But Carlo Messina, CEO of Intesa Sanpaolo told CNBC Tuesday that the Italian referendum is not Brexit 2.0. "The referendum is not Brexit. It is not leave or remain into euro zone. It is a change of a constitutional law so it can change or create the instability, some volatility but something that can affect the trend or reform within the country. There is an exaggeration on the approach outside of Italy on the results of the referendum."

