What can we expect from the markets under Trump 2? “His plan could increase the US debt to 130%.”

The New York Stock Exchange expected to rise sharply

Traditionally, markets are upbeat following a presidential election in the United States. Notably because it removes the uncertainties that reigned until then. On Wednesday morning, the European markets, the first to react to Donald Trump’s victory, were also on the rise: in the first exchanges, the Paris Stock Exchange advanced significantly (1.11%), London gained 0.86%, Frankfurt 0.82% and Milan 0.63%. And we can undoubtedly expect, this afternoon, a sharp rise on Wall Street: in pre-session trading, the contract on the flagship Dow Jones index gained 2.24%, that on the index broader S&P 500 rose 2%, while that for the Nasdaq, with a strong technological component, gained 1.65%.

The fact that Donald Trump can count on a completely Republican Congress tomorrow should allow the future president to implement his economic program. As a reminder, in addition to lowering taxes on businesses, the man is banking on protectionism and wants to increase all customs duties upon entry into the United States. The latest news is that he would increase customs duties from 10 to 20% on all imports, and would like to increase them to 60% on Chinese imports and even 200% on vehicles imported from Mexico.

Furthermore, among candidate Trump’s emblematic measures, there is also the increase in oil and gas drilling in the United States to ensure the country’s energy independence.

But, among Donald Trump’s intentions, there is obviously also the desire to control the borders much better, with the risk of bringing tension to the job market and driving up wages.

Sectors that could be favored by Donald Trump

What could be the long-term impact of these measures on the markets, and in particular the New York Stock Exchange? “We must never exaggerate the influence of politics on the evolution of actions. Other factors come into play: monetary policy, company results, the level of the dollar, among others.recalls Christophe Dembik. And on this level, certain concerns are also being expressed on the markets, because Donald Trump’s program – especially his protectionist measures and the “closure” of borders – could turn out to be quite inflationary. “Budgetarily, Donald Trump’s economic program is not neutral and could increase the United States’ debt to 130% of gross domestic product. With perhaps a little more inflation – even if it is not a return to 2022 levels – and interest rates which could anchor around 4% instead of continuing to fall “recently estimated in The Free Jérôme van der Bruggen, chief Investment Officer at Degroof Petercam. American bond rates also reached a high this Wednesday morning, around 4.40%, while the dollar was also at a one-year high.

Donald Trump does not wait for the latest results and declares himself the winner

However, a rise in inflation could encourage the American Central Bank (the Fed) to pause its current rate reduction movement, which could have a negative effect on the markets. Initial indications could come quickly, with the Fed meeting this Wednesday and Thursday – we expect a further reduction in key rates of 0.25 basis points but the Fed could also give indications on the continuation of operations.

Conversely, one element clearly argues for an increase, at least initially, in the American market: the reduction in corporate taxation which will undoubtedly push the profits of (large) American companies (up to + 11.5% to + approximately 11.5% per year), over the next few years.

And in the section of American values ​​which could benefit the most from the presidency of Donald Trump, experts generally point to the automobile, fossil fuels (gas and oil), the space sector (given the connections with Elon Musk), armaments , finance and cryptocurrencies, with Trump being rather in favor of deregulation of the financial sector. On Wednesday morning, bitcoin was already soaring by more than 5.5% to nearly $73,000, boosted by the prospect of regulatory relaxation in the event of Donald Trump’s definitive victory.

Finally, the new technology sector (and in particular everything that revolves around artificial intelligence), which has strongly pushed the American market recently, should continue to benefit from the good graces of a Republican administration, unlike this which could have happened under the Democrats who wanted to regulate this sector more to better protect privacy and consumers.