What a Trump 2024 Win Could Mean for Global Markets
With Donald Trump’s victory in the concluded US 2024 election, big changes may be on the horizon for markets worldwide. Here’s a breakdown of what might happen across different sectors: Currencies Under a Trump presidency, the U.S. dollar is expected to get stronger. Analysts believe that his policies could lead to higher inflation and growth, which would keep Federal Reserve interest rates high to control the economy. This would make the dollar more attractive to investors, potentially causing it to rise about 3% according to Citi analysts. Meanwhile, other major currencies like the euro and China’s yuan may weaken. Tariffs and Trump’s focus on the U.S. economy over international trade could add to pressures on the euro, possibly pushing it below $1. Japan’s yen and Switzerland’s franc could become popular for investors in a stronger dollar environment, with the franc especially benefiting from its stability. Stocks Trump’s plans to cut taxes and reduce regulation for large companies could benefit U.S. stocks, particularly in banking, technology, defense, and oil sectors. Reducing the corporate tax rate to 15% from 21% could lift earnings for major companies and push stock prices higher, per Goldman Sachs. However, Trump’s tough stance on trade, especially with China, might increase costs for multinational companies, which could impact their profits. Companies in Europe and Japan with big stakes in U.S. markets may also struggle if trade tensions worsen. Bonds A key concern is how Trump’s spending plans could increase the U.S. national debt. Higher inflation and rising Treasury yields mean that the U.S. may face higher borrowing costs, with government debt possibly swelling by $7.5 trillion over 10 years. Rising U.S. interest rates could also influence central banks worldwide to raise their rates, potentially driving up global bond yields. Commodities Trump is expected to push for more U.S. oil and gas production, potentially keeping oil prices lower domestically. At the same time, he may increase sanctions on oil exports from countries like Iran, which could reduce global supply and keep oil prices from falling too much. U.S.-China trade tensions could impact agricultural commodities like soybeans, which already saw a 25% price drop over the past year due to reduced Chinese purchases. Soybean farmers, particularly those focused on exports, could be hit hard if tariffs return. Emerging Markets Emerging economies may face challenges, especially if Trump imposes tariffs on countries like China and Mexico. For example, Mexican exports could see a 200% tariff on vehicle imports, which would likely weaken the peso. Trump’s vice president, JD Vance, has proposed a 10% tax on remittances, which are essential to many Latin American economies, adding another layer of potential economic stress. Markets in countries like South Africa and Brazil, and tech industries in Taiwan and South Korea, might also feel the effects of a strong dollar and trade tensions. However, countries with strong growth stories, like India, or those rich in essential exports like Chile’s copper and lithium, could emerge as safe havens in a volatile market. Sustainable Investing Trump’s campaign promises to expand oil and gas drilling and coal mining could boost stocks in these sectors but might limit growth in green energy industries. Trump also plans to reduce or cancel funds for clean energy initiatives established under Biden’s Inflation Reduction Act. These moves could make U.S. sustainable funds less attractive, especially as they have seen net withdrawals since 2022. The 2024 election outcome may create a very different investment environment, favoring traditional energy and the U.S. dollar but challenging sustainable and emerging markets. If Trump proceeds with the policies he’s discussed, the global economy could see a shift in how investments flow across sectors and regions.
