Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

US election clearing event for European equities, Barclays says

Published 06/11/2024, 12:58
© Reuters.
UK100
-
STOXX
-

Investing.com -- Barclays analysts said in a note Wednesday that they view the U.S. election as a pivotal "clearing event" for European equities, noting that a Trump victory supports a reflation trade and provides relief for investors seeking resolution.

According to Barclays (LON:BARC), markets were largely positioned for a Trump win, with U.S. yields, the dollar, and U.S. equities rising, while European markets lagged.

The outcome aligns with market expectations, given that betting odds had favored a Trump victory even as the gap narrowed in recent days.

With Republicans looking likely to retain control of the Senate, the so-called "Trump trade" is back in full force, according to the bank.

Barclays analysts note this trade is characterized by rising rates, a stronger dollar, and higher U.S. equity futures, which highlight relief in the market as investors settle into this familiar landscape.

However, European equities may see a relative disadvantage, especially if the U.S. government remains divided, as a Red Sweep could exacerbate tariff risks for Europe.

According to Barclays, tariffs remain "a key risk" for the European market, and a divided Congress could limit domestic fiscal measures while keeping international trade policies at the forefront.

For U.S. equities, Barclays considers a Red Sweep as the "most positive outcome," while the Trump-win-with-divided-Congress scenario is seen as "the most negative outcome" for European stocks, at least in relative terms.

Barclays expects potential "knee-jerk" reactions in the near term, with European equities vulnerable to U.S. fiscal and trade policy uncertainties, especially around tariffs.

Longer-term, however, they believe the Trump victory might stabilize market expectations, encouraging a renewed focus on growth-oriented sectors across U.S. and European markets alike.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.