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60 seconds on the market implications of Trump's victory

Johanna Kyrklund discusses the possible impact of Donald Trump's US election win on various asset classes.

09/11/2016

Johanna Kyrklund

Johanna Kyrklund

Global Head of Multi-Asset Investments

Trump’s victory will probably put pressure on equity market valuations as investors price in a higher level of political risk.

There is also a concern about the impact on emerging markets, as Trump has been vociferous about imposing tariffs, for example on Mexico and China. We will have to see in the next few months whether Trump’s bark is worse than his bite when it comes to trade.

In the meantime, there could be some buying opportunities as we head into year-end. The Treasury market so far has been stable. We have to monitor that very closely because some of his policies may be somewhat inflationary. For now, we would definitely avoid Treasuries.

The US dollar has weakened and that is good news because it alleviates pressure on the US economy. Ironically it also helps the emerging markets where, in many cases, their currencies are pegged to the US dollar.

Overall, there are a lot of implications to process over the medium-term but in the short-term we think the US dollar could act as a shock absorber as investors price in higher political risk.