European stock markets reacted with joy to Trump’s arrival in the White House
European stock markets are welcoming the presidency of Donald Trump, who will return to the White House with a resounding victory not expected in opinion polls. The continent’s stock markets are up by around half a point, with the UK stock market (Ftse 100) leading the gain at 1%. Some gains slowed throughout the morning as the eurozone index reached 1.5%. However, Ibex 35 stands out from this photoand it is the only index marked in red on Wednesday.with losses of 2%, according to mid-session data. The reason for this decorrelation of the Spanish benchmark is the decline approaching 5% in national banking institutions and the large weight that this segment has in the index.
“Over the next few months we will see Donald’s proposed policies materialize, allowing us to draw new conclusions. At this point, four years into his previous mandate, the difference between The Eurostoxx and S&P 500 indices were 56% in favor of American companies.this is the highest difference in the last 25 years,” they explain from XTB.
“Possible tariffs in the region, which could cause the overall territory’s GDP to fall by 1% next year, will be the fundamental reason for these differences. In fact, companies in the luxury or automotive sectors have suffered recently. weeks of polling advantage giving Donald Trump the win,” they add from the analytics firm.
iBroker’s Antonio Castelar explains that while the major European indices started the session higher (with the exception of the Ibex), the continent’s outlook is less positive, “as a possible resumption of Trump’s protectionist tariff and trade policies is a concern,” the expert explains.
“While sectors such as European defense could benefit if they were motivated to increase their investment in line with NATO commitments, Industries with an international presence, such as automotive and manufacturing, may come under pressure.“, they conclude.
For their part, Thomas Hempell and the macro and market analysis team at Generali AM, part of Generali Investments, contribute: “Historically, stocks tend to rise after elections as uncertainty decreases. Thus, the near-term outlook is bullish, albeit elevated. US bond valuations and rising real yields could dampen the rally. We see positive 3- and 12-month total returns for both the US and EU, driven by fundamental trends, easing central bank policies, and the continued shift away from technology.
Regarding his sectoral analysis, Hempell recalls that EU export companies (exposed to US tariffs on cars, drinks and electronic equipment) fell 13.5% year on year, “and we don’t see renewables/green energy/ESG are not attractive to them or luxury companies.. Our Trade Fear Indicator also highlights continued risk for EU cyclicals relative to defensives. Among EU cyclical factors, banks could benefit from their domestic nature and positive correlation with global yields,” he concludes.
Matthew Gilman and Thomas Parmentier, strategists at UBS Global Wealth Management, also predict a worst-case scenario for the European market: “While equity fundamentals remain broadly favorable, We see less upside potential for European equities under a Trump presidency. In particular, we see risks to economic growth from trade tariffs and rising US bond yields, which could weigh on valuations. “The positive market reaction likely reflects some weakness in European currencies today and that European shares have already fallen 6% in dollar terms since the end of September until the election.”
In Renta 4 they break down the economic panorama, which is presented based on the policy program presented by the Republicans: “Expect more inflation (higher tariffs, 10% general and 60% Chinese, immigration restrictions with potential upward impact on wages), higher short-term growth (tax cuts), although likely lower in the medium term (due to higher tariffs) and higher rates (fewer Fed cuts, with the market currently clearing a 25 basis point decline between now and until 2026). Context that will increase the dollar’s exchange rate against the euro. In fact, the dollar is already reaching summer highs.
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