If Donald Trump secures a win in the 2024 presidential election, projections indicate that his policies could have a significant impact on multiple areas of the financial markets.
The primary beneficiaries are expected to be the US dollar and the stock market, while bonds, emerging markets, and sectors focused on clean energy and sustainable investing may encounter obstacles. Let’s examine the potential effects of a Trump victory on critical facets of the global economy.
A stronger US dollar is anticipated to be one of the most notable outcomes of a Trump victory. His pro-growth and pro-inflation economic policies are expected to prompt the Federal Reserve to keep interest rates elevated.
This is likely to make the dollar more appealing to investors, driving its growth. Forecasts suggest the dollar could rise by 3% after the election, especially if new tariffs and tax incentives follow, potentially pressuring the euro below the critical $1 mark. A further weakening of the Chinese yuan is also anticipated, similar to its performance between 2018 and 2020.
Additionally, Trump is expected to maintain a favorable stance on cryptocurrencies, which could create a positive outlook for Bitcoin, potentially supporting its continued rise.
His presidency is expected to benefit corporate sectors such as banks, technology, defense, and fossil fuels. Tax cuts, including a reduction in the corporate tax rate from 21% to 15%, are likely to support corporate profits, with a particular boost for the S&P 500.
That being said, protectionist measures, including tariffs on Chinese goods and crackdowns on other countries, could pose challenges for multinational corporations, raising their costs and diminishing profitability.
The US stock market as a whole is expected to be more stable, driven by rising dollar yields and strong demand for domestically focused stocks. However, companies with international exposure, such as those in chip or automobile manufacturing, may face risks due to shifts in tariff policies.
A Trump victory is likely to influence commodity markets, particularly the oil sector. He is expected to continue policies aimed at maximizing oil production in the United States and expanding federal leasing, further solidifying the country's position as the world’s largest oil producer.
At the same time, stricter sanctions on Iran could restrict global oil supplies, adding additional pressure on prices.
A Trump win in the 2024 presidential election will undoubtedly reshape the dynamics of global financial markets. While the US dollar, stock market, and commodities are likely to receive support, emerging markets are expected to face increased pressure.
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