Trump 2024 & Your Investments

Trump 2024 - How Does His Victory Affect Your Investments?

Donald Trump won the 2024 US presidential election yesterday, marking a notable return to power and a significant shift to the right. Trump outperformed his 2020 showing, surpassing expectations in both red and blue states, and won the majority of the electoral college votes to defeat Kamala Harris.

What does this mean for markets?

The election result has triggered strong market reactions, largely due to a Republican sweep in Congress which paves the way for Trump’s ‘market-friendly’ policies. Here is a summary of the key market impact:

1. Currency and treasury markets

Developed markets responded positively to the election result, leading to a rise in the dollar index. The tariff hikes and increased deficit spending are seen as favourable policies for the dollar. Conversely, the Treasury market experienced a sell-off, with 10-year note yields climbing to 4.4%. This increase is fuelled by concerns over higher inflation due to deficit spending, which could limit the Federal Reserve's capacity to reduce interest rates.

2. Equities

US equities experienced a significant surge, with the S&P 500 and Dow Jones futures enjoying a robust opening. The standout performer was the small-cap Russell 2000 index; projected to climb by up to 6%. In Asia, the Japanese Nikkei achieved a 2.6% gain, while the Hong Kong China index declined due to tariff concerns. The anxiety over increased tariffs has affected not only Chinese companies but also European auto manufacturers.

3. Sector-specific gains

The Republican victory raises hopes for corporate tax cuts, deregulation and tariffs. However, the specifics and timing of these policies are still unclear, and Trump's unpredictability adds a layer of potential market volatility.

The real impact of this significant political event will hinge on the specific fiscal policies enacted and the timeline for their implementation. As such, we advise approaching this morning's market reaction with caution. Although Trump's policies seem market-friendly, his unpredictable behaviour has historically led to market volatility.

Our long-term investment philosophy encourages us to look beyond the immediate noise and concentrate on lasting value, instead of short-term fluctuations. We consistently monitor geopolitical risks when building portfolios, prioritising quality companies that can endure political turbulence.

As the financial markets react to the recent election results, it's crucial to reassess your investment strategy. At AI Wealth, we specialise in navigating such uncertainties and aligning your portfolio with your financial goals. Take the first step towards securing your financial future by booking a complimentary consultation with our expert advisors. Click the "Book a Meeting" button below to schedule a time that works for you and let's discuss how we can help you thrive in this evolving economic landscape.