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reOnald Trump is always good for a surprise, including the 2020 presidential election. Once again, the Republican has disproved all the polls and done surprisingly well. This permanent potential for surprise is a horror to many political opponents.
Financial market players, who had recently opted for the Democrats’ march, were caught on the wrong foot. The day after the election, stock markets in Europe initially sank in shock. Later, however, they were able to stabilize and US prices also turned positive after strong fluctuations.
The price gains can be explained. Even if they are reluctant to admit it publicly, quite a few stockbrokers were secretly hoping for a victory for Trump. Because for some industries and assets, the Trump scenario is a true blessing.
Source: WORLD infographic
Investors and entrepreneurs alike appreciate some of the Republicans’ choices. “With Donald Trump, markets can expect growth-oriented policy,” says Thorsten Polleit, chief economist at Degussa Goldhandel, describing one consideration. Challenger Joe Biden is more likely to push politics into more state and more regulation. That suggests low returns on equity. Regardless of who is president, the following also applies: “Monetary policy of low interest rates and increased money supply continues. This outlook supports financial markets and, in particular, equity markets. “
That explains why even impending electoral chaos in the US – incumbent Trump expressed doubts about the legality of the counting processes in some states – failed to upset the securities traders. In the run-up, many strategists feared it could trigger a long hangover. And this uncertainty would be a poison for the markets.
But there were no signs of that Wednesday. Also on the German Dax stock index, many stocks rose sharply. The top winners were Fresenius Medical Care and Fresenius health stocks, which rose as much as seven percent.
In the small-cap segment, biotech stocks such as Sartorius and Evotec rose in particular. Lubricant specialist Fuchs Petrolub (where parts of the business are connected to the internal combustion engine) also made a permanent appearance. In contrast, only a few values were in red.
The market crashed in 2016 when, despite all the polls, Donald Trump’s electoral victory became apparent. At that time, however, the victory was clear relatively quickly.
The surprising triumph of the then-outsider, who had previously been a building contractor and television host, triggered a spontaneous sale. However, the stock market was able to recover during the day. The Dax, like the leading US S & P500 index, even closed higher the day after the election.
Source: WORLD infographic
From a corporate point of view, one point in favor of Trump’s policy is lower taxes. The reduction in corporate tax, along with share buybacks and cheap central bank money, was a factor driving the favorable development of the stock market on Wall Street.
Since Trump’s election in early November 2016, the S & P500 has gained about 70 percent, the Nasdaq Technology and Growth Stock Index even improved by 124 percent.
Big Tech is one of the winners
Investment bank JPMorgan had already described a Trump win as the cheapest for stocks before the election. In this case, the S&P 500 could go as high as 3,900 points. From the current level, this would correspond to an increase of 15 percent.
Goldman Sachs, on the other hand, had identified a “blue wave” as positive. At first, there appears to be neither a Trump victory nor a democratic triumph.
The latter especially helps “Big Tech”. Democrats had harshly criticized corporate power in recent months and years, and Facebook, in particular, should have feared it would have been crushed in the event of a “blue wave.” In the Trump paradigm, platforms have a good chance of further expanding their international dominance.
In the high-tech sector in particular, it shows how far behind Europe is now. The continent can hardly offer a high-tech company that plays in the world league.
Now that it appears that Trump’s election was probably not a slip, but rather set a new path in US foreign and economic policy, Europe faces an even greater challenge. Europeans are almost forced to unite and intensify cooperation if they do not want to be completely marginalized from the global economy.
The largest technology company in the Old World is the Dutch chipmaker ASML, which is only ranked 58th in the world with a market value of 150 billion dollars. Germany’s number one SAP is even further behind.
Even in the politics of this country, some quietly express their sympathy for some aspects of Trump’s policy. The corporate tax cut implemented by the current administration is putting pressure on other countries to also reduce the tax burden on companies.
In Europe, for example, France has lowered corporate tax; Some observers see this tax competition as an effect of the Trump paradigm.
