The results of the presidential election in the United States ultimately turned out to be less close than expected and Donald Trump will probably be able to run for the White House for the second time. The Senate is already his, while the House of Representatives could also switch to the Republican camp.
The reaction of the markets was not long in coming. Already yesterday on Wall Street, investors had begun to anticipate Donald Trump's victory with a 1.23% increase in the S&P 500 index. And this morning, futures contracts were still up 1% on the American market. Same positive reaction in Europe, where the CAC 40 index of the Paris stock exchange climbs by more than 2% in the first exchanges. Only the Chinese stock market fell in the prospect of a trade war. “The good news is that a Trump presidency will be synonymous with lower taxes for American businesses, with corporate taxes potentially falling to 15%…this should accelerate business investment,” notes Christopher Dembik, advisor. in investment strategy at Pictet ZAM. Analysts at Bank of America have calculated that a reduction in the tax rate from 21% to 15% would increase the earnings per share of companies in the S&P 500 index by 4%.
For his part, Stephen Dover, director of the Franklin Templeton Institute at Franklin Templeton, believes that “the biggest winners will be sectors and industries welcoming a more business-friendly regulatory environment, including fossil fuel companies, financial services and smaller-cap companies, while fears of prescription drug price caps fade, which will favor the pharmaceutical sector.
If European stocks react well initially, they could still be negatively impacted, particularly in the automobile sector in the event of a trade war with the United States. For John Plassard, director at Mirabaud, the luxury sector and European high-tech companies could also suffer from American trade retaliation. Although the rise in the dollar should nevertheless benefit European exporting companies.
In recent weeks, markets have played the “Trump Trade,” a strategy consisting of anticipating the economic implications of a victory for the Republican candidate. They concern in particular the fight against immigration (which will increase the cost of labor and revive inflation), the slippage in the budget deficit linked to tax cuts (which will also have an effect on inflation as well as on the cost of the American debt) and the increase in customs duties (which will also stimulate inflation).
Beyond the beneficial effects for American companies, these measures militate in favor of a rise in the dollar and the yield on 10-year American Treasury bonds (it is also continuing its rise this morning, to nearly 4.40 %) with the corollary of pressure on the bond market. Donald Trump's favorable speech in favor of cryptocurrencies is also boosting Bitcoin.
But be careful, the path is not completely clear for the markets. The return of Donald Trump could also intensify geopolitical tensions, particularly with China, warns John Plassard.
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