Lindsay James, investment strategist at Quilter Investors has commented on the latest financial and market news following President Trump’s election victory.
She said: “The market reaction to Donald Trump’s landslide victory suggests that while the betting markets might have been correct, they weren’t fully trusted. Whether this rally will be short-lived remains to be seen. Lower corporate taxes and lighter regulation might be early wins for business, but there are long-term dangers, including potential interference at the Federal Reserve and inflationary pressures from trade tariffs and mass deportations, which could significantly impact ordinary Americans. Ironically, Trump’s supporters, who have blamed inflation for making them poorer under the Biden administration, might face further economic challenges.
“It could be a case of ‘buy now, pay later’ with bond yields already climbing and a strong dollar hurting exporters who will soon likely face their own barriers to trade as countries retaliate.
“In Europe, the reaction has largely been one of horror. Government officials are hurriedly disavowing earlier comments, fearing a vindictive response. There is a sense that global trade and relations are about to be severely tested. Europe’s approach to net zero, with relatively high carbon costs under the EU Emissions Trading Scheme, is making international competitiveness a challenge in a world led by Donald Trump and Xi Jinping.
“The effects of climate change are increasingly evident, with recent devastating floods in Valencia still fresh in memory. Whether climate policies can survive despite these impacts is a major question for Europe, which is now shuttering auto factories that are no longer profitable under mounting regulation. Meanwhile, Trump’s pledge to ‘drill, baby, drill’ contrasts sharply with Europe’s climate goals.
“Even though a more certain path to lower interest rates in Europe is welcome, political leaders face fundamental questions with no easy answers, risking that the electorate may ultimately decide for them.”
