“The market is likely to focus on corporate tax rate cuts pledged by Trump, as well as intentions on tariffs, as these could fuel a more inflationary trend, which would lead to a more hawkish monetary policy response by the US Federal Reserve (Fed). Ultimately, markets will be most impacted by monetary policy expectations, on the back of this US presidential election outcome. As we highlighted in our pre-elections report, entitled “Clean Sweep or Lengthy Recounts?”, a Trump presidency could lead to a more inflationary environment, but one potentially more supportive to corporate profits and earnings growth from lower taxes. Blanket tariffs, with a particular focus on China, could contribute to inflation and a more hawkish Fed, as well as a stronger US dollar (USD). Trump will also be seen as more pro-deregulation, which could be supportive of big-tech companies in particular. M&A activity could also pick up materially under a Trump presidency, with the appointment of a new head of the Federal Trade Commission (FTC).”
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Morten W. Langer
