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Trump’s return to the White House: Market winners and losers
By Naomi Rovnick, Amanda Cooper and Dhara Ranasinghe
LONDON (Reuters) – U.S. President Donald Trump’s return to the White House has been met with both relief and disappointment across world markets as investors try to work out what the next four years will bring.
“The approach will be chaotic, unpredictable, spur of the moment and driven by Trump himself,” said Russel Matthews, senior portfolio manager, global macro at RBC BlueBay Asset Management.
Here’s a look at some of the winners and losers emerging from Trump’s first 24 hours in office.
1/ NAME CALLING
Calling out Canada and Mexico as potential targets for tariffs took a further toll on their currencies, which fell sharply following Trump’s inauguration speech.
Bets on the Mexican peso or other tariff-exposed emerging market currencies were too risky, said Fidelity International multi-asset manager Becky Qin.
“It is so binary and so dependent on the dollar,” she said. “The policy uncertainty is too high.”
Goldman Sachs strategists said they see a 70% probability of Trump hitting China with 20% tariffs but said the odds of him fulfilling his pledge for 25% import levies on Canada and Mexico were low.
The dollar is trading near its strongest levels against Canada’s currency in almost five years, with the so-called Loonie also weighed down by economic weakness and rate cut expectations.
Markets have swung towards bets that China will not permit its tightly controlled currency to weaken to counter heavy U.S. tariffs. Analysts still expect a 5% to 6% drop by year-end.
Fidelity’s Qin said she had a position that would profit if the offshore yuan weakens further against the dollar, which may be one of the few trades that shines if aggressive tariffs spook markets.
2/ ROLLER COASTER
The euro and sterling rallied over 1% on Monday, notching their best one-day gains since late November versus the dollar, cheered by Trump’s decision to not immediately impose tariffs.
Yet, Tuesday’s falls in European currencies suggested the relief rally was already over.
ING currency strategist Francesco Pesole said if more days pass without Europe being explicitly mentioned in Trump’s tariff comments, the euro could benefit.
“That support may, however, prove rather short-lived as things can – as we learned yesterday with Canada and Mexico – change abruptly on protectionism, and the euro remains generally unappealing from a number of macro fundamentals,” he said.
ABN AMRO downgraded its year-end euro/dollar forecast to $0.98 from $1, implying a 5% weakening from current levels.
With President Trump’s recent return to the White House after his battle with COVID-19, the stock market has been reacting in various ways. Here are some winners and losers in the market following his return:
Winners:
1. Healthcare companies: With the president’s successful recovery from the virus, healthcare companies are seeing a boost in confidence and potential for increased demand for treatments and vaccines.
2. Defense companies: President Trump’s return to the White House may signal stability and strength, leading to increased military spending and contracts for defense companies.
3. Energy companies: The president’s support for the oil and gas industry could benefit energy companies as policies favorable to these sectors may continue.
Losers:
1. Technology companies: With uncertainty surrounding the president’s health and the upcoming election, tech companies may see a dip in stock prices as investors seek safer investments.
2. Renewable energy companies: President Trump’s support for traditional energy sources could lead to setbacks for the renewable energy sector, impacting companies in this space.
3. International markets: The president’s health scare and potential impact on the election could create volatility in international markets, causing uncertainty for investors.
Overall, the market reaction to President Trump’s return to the White House is mixed, with certain sectors benefiting while others face challenges. Investors will be closely watching for any further developments that may impact their portfolios.
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