The election of Donald Trump as US president has given a boost to the markets in the US and triggered large price gains for certain companies. While share prices in the banking and steel sectors and for companies with close ties to Trump rose, European markets were more concerned and reacted with losses, mainly due to the prospect of possible punitive tariffs.
Analysts expect Trump's new US economic policy to implement protectionist measures, deregulation and tax cuts, which could give the economy a positive boost. The Trump team also plans to relieve the financial market, which will particularly boost the banking sector: Shares in Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM) rose sharply, by more than 10 per cent each, with Goldman Sachs even rising by a whopping 17 per cent in just one day. Tesla, whose CEO Elon Musk supports Trump, also rose by more than 13 per cent by the close of trading in Germany. TMTG, the company that operates the Truth Social platform and was founded by Trump, also benefited from the sentiment and rose by up to 35 per cent.
The US steel industry is another winner. Stocks such as Cleveland-Cliffs, Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) rose by double-digit percentages as analysts expect Trump to strengthen the American steel industry through protective measures. US Steel also benefited despite possible challenges from Trump's opposition to a merger with Nippon Steel.
Negative impact on European markets
While the US markets received positive impetus, European markets were weighed down by uncertainty. In particular, German carmakers came under pressure as Trump may impose punitive tariffs on imports from Germany. The share prices of Volkswagen (ETR:VOWG_p), Porsche (ETR:P911_p), Mercedes-Benz and BMW each fell significantly.
The renewable energy sector also reacted negatively. Companies such as RWE (LON:0HA0), Nordex (ETR:NDXG), SMA Solar, but also US stocks such as Frist Solar recorded losses, as Trump is more likely to rely on fossil fuels. Investors expect less support for green energy projects under his administration.
Some European defence companies, on the other hand, could benefit from a Trump presidency. Rheinmetall (ETR:RHMG), Hensoldt, BAE Systems (LON:BAES) and Leonardo rose sharply this week as expectations grew that Trump would increase pressure on NATO countries to increase their defence spending.
Impact in Asia and in other US industries
Asian markets reacted differently: Japanese stock markets rose, while Chinese markets fell slightly. In the US, too, there were sectors that suffered losses due to Trump's election. Retailers such as Target (NYSE:TGT), Home Depot (NYSE:HD) and Lowe's, which rely on imports from China, were weighed down by the prospect of tariffs and lost around three per cent.
Furniture retailer Wayfair even lost 15 per cent, and shares in Best Buy (NYSE:BBY), Mattel (NASDAQ:MAT) and Hasbro also lost over five per cent. Nike (NYSE:NKE) also suffered a minus of three per cent.
The bottom line, however, is that the year-end rally is in full swing, especially in the US. The US market was already bullish before this, and that was clearly underlined again this week. Those who make the right decisions now can expect very high profits by the end of the year.
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