Donald Trump‘s victory in the US presidential elections led to a decisive response from the markets. Futures on US stock exchanges are rising sharply and so are the European markets with the Ftse Mib of Piazza Affari gaining 0.8%, the German DAX 1.1%, while the French CAC 40 rises by 1, 62%. Asia was contrasted with Tokyo rising by 2.6% while Hong Kong lost 2.2% and Seoul shaved 0.5%.
Yields on 10-year US Treasuries jumped to 4.44%, up 16 basis points, while two-year bonds rose to 4.30%. The dollar has strengthened consistently against all the main world currencies as the more protectionist economic policy should favor the inflow of investments just as the promotion of industrial development should also bring with it inflation by keeping US rates above of European ones.
The entire crypto world is flying as Trump and Vance have actively supported and encouraged the use of these assets. Dogecoin rose more than 22% and Shiba Inu gained 8%, according to Coin Metrics. The moves came as bitcoin rose to a new record high of $75,000.
The real surprise is in the reaction of the headlines on Piazza Affari which could benefit from Trump’s policies. According to Intermonte analysts, the positive implications on the stock market will concern the companies most exposed in the US to investments in infrastructure, deregulation, fewer subsidies and lower taxes and the groups that produce directly in the United States. Among the Italian companies, Tenaris (+5.2%), Prysmian (+1.9%), Buzzi (+6.1%), Diasorin (+4.1%) while possible penalties will concern companies exposed to duties such as Stellantis (+ 0.9%) or luxury stocks that export across the Atlantic. With a possible lower commitment from Washington at the international level and in NATO, several operators expect that Europe will have to further increase its focus on strengthening defense and this should benefit companies in the sector.
But what really changes for investors and for us ordinary citizens? First of all, we will have to wait until tomorrow for the outcome of the Fed meeting and a decision on rates. Even for President Jerome Powell, a further reconfirmation in 2027 is far from a given because, even if appointed by Trump, he would have partially failed to meet his expectations.
Here are some immediate comments from analysts on how to orient one’s portfolio choices in light of the victory of a politician “against the tide” compared to the choices made by the stock markets in recent years.
Marco Midulla of Symphonia SGR notes that the impact on the markets is consistent with forecasts. Trump focused his campaign on three main themes: lower taxes, more tariffs and less immigration, which directly influence inflation and growth. The dollar appreciated against all major currencies, with the euro falling 1.8%, while the US stock market rose 2%. On the contrary, the Chinese stock market fell by 3%, penalized by the expectation of new duties, while the European market partially followed the American rise thanks to the more cyclical sectors and banks.
According to Mark Haefele of UBS, the outlook for US equities and the dollar is strengthening. Haefele expects the S&P 500 to reach 6,600 points by 2025, supported by US economic dynamism and slowing inflation. Instead, as regards the bond market, Haefele sees the recent “sell-off” as excessive, expecting that the Fed will be able to maintain a rate reduction path. Haefele expresses a positive view on investment grade bonds and predicts a possible further rise in gold, with a moderate weakening of the dollar in the medium term.
Gordon Shannon of TwentyFour Asset Management highlights a parallel with Trump’s 2016 election: the stock market is rising, while long-term government bonds are showing rising yields, driven by expectations of strong fiscal expansion. Shannon points out that the market’s attention could focus on the inflationary effect of restrictive trade policies and reduced immigration. The Fed may be forced to react to such inflationary pressures to maintain price stability.
The policies announced during the election campaign – import tariffs on many goods, tax cuts, a new crackdown on immigration and deregulation of oil & gas – should push up inflation and economic growth in the USA in the next two years, analysts write of Unicredit, but the Federal Reserve could put the rate cut on hold (after the discounted one tomorrow and another expected in December).
“With Trump’s policies – underlines Filippo Diodovich, market strategist at IG – a return of inflation is likely: if this happens the Federal Reserve will probably have to change its monetary policies”.
Prudent Luigi de Bellis, co-head of the Equita research office, for whom “an immediate rebound of the stock markets, especially American ones, less so of the European ones and a strengthening of the dollar” is probable.
The increase in bond yields will be slight (+15/+20 basis points) because they had already risen recently, while «on equities the most positive impacts should concern the traditional value/cyclical sectors and small caps».
