The current period is characterized by a number of economic and political challenges, making it a critical phase that requires careful analysis of future trends.
If he can Trump From back to The white houseIt is expected that his economic policy trends will be strengthened Protectionism And pressures on US allies, which could lead to significant fluctuations in… European markets.
On the other hand, fears are increasing about the impact of his policies on… International tradeAnd prices Energyand the environment, which may lead to changes in the performance of European stocks.
According to the British newspaper “Financial Times”, the possibility of Donald Trump imposing a group of… Customs duties If the new presidential election wins, it affects Shares of European companies Export sensitive companies such as Automotive industry And groups Luxury goods.
The newspaper inferred this by a decline in a group of 28 European stocks most exposed to US customs duties. Barclays by 7 percent since late last September, with odds of winning The American President Previous election.
The group that includes LVMH And Volkswagen Other stocks have declined by 2 percent since the beginning of the year, compared to an increase of 8 percent for the market European stocks Wider.
These declines show how the former US president’s pledges to launch a trade war if he wins a second term in the White House in the November 5 elections “put more pressure on industries already suffering from lackluster domestic economies and slowing demand from their main markets in the world.” China“.
For his part, Luca Paolini, chief strategist at Pictet Asset Management, says: “These sectors face a triple whammy of Trump’s influence, stagnant growth in the European Union, and China’s slowdown.”
Wall Street
The aforementioned British newspaper report indicates that European stock markets are lagging behind the significant rise they witnessed Wall Street This year thanks to technology companies, the S&P 500 rose more than 20 percent.
Analysts expect Trump’s agenda to reduce… Taxes The US stock market is strengthening, so any damage to European exporters threatens to widen the gap further.
Trump said he would impose huge tariffs on… Imported goodsand select Customs tariffs By 20 percent for Europe and 60 percent for China, which prompted International Monetary Fund to warn that his policies would jeopardize global growth.
Emmanuel Cao, head of European equity strategy at Barclays, said that the markets are driven by increasing odds indicated by prediction markets that Republicans will achieve a so-called red victory, as they control the presidency and both chambers of Congress.
And establish a stock exchange Cryptocurrencies PollyMarket now has Trump’s odds of winning the presidency at 62 percent, compared to 48 percent a month ago. “Over the past month, the Trump trade has taken off in full force,” Kao said.
Trump deals
The recovery of the so-called “Trump deals” has also contributed to strengthening the dollar in recent weeks and added activity to the selling in the US Treasury market, given that his tariff-driven agenda is expected to lead to increased inflation and interest rates.
Companies included in the Barclays basket generate more than 30 percent of their revenues in the United States, including Daimler Trucks, chemical group Arkema, and Diageo. However, some analysts believe that the pessimism prevailing in European markets is exaggerated.
According to Hugh Gimber, global market strategist at JP Morgan Asset Management, European markets are trading at a 40 percent discount compared to the United States, which partly reflects the threat of renewed trade hostilities. “This negativity appears to be now well reflected in prices,” he added.
Mark Schartz, portfolio manager at Janus Henderson, said he expects a broader rally in stocks in the wake of the Republican win, which would also benefit European stocks. “If we get a decisive winner, it will be supportive for the markets,” he added.
Wide influences
In an exclusive interview with the “Eqtisad Sky News Arabia” website, Dr. Nidal Al-Shaar, economic expert and chief economist at ACY, Nidal Al-Shaar, says:
- The value of foreign trade between the European Union and the United States of America exceeds one trillion dollars. The European Union has a surplus in goods, while it suffers from a deficit in services.
- Therefore, any process of raising US customs duties and tariffs will constitute a shock to European exporting companies, which requires the European Union to deal with this shock by all available means.
- He adds: This is not the first time that the European Union has been subjected to an increase in customs duties. In his first term, President Trump imposed tariffs of 25 percent on steel imports and 10 percent on aluminum.
At the time, the European Union was not prepared to deal with these tariffs, and settled for mild retaliation. Today, the European Union appears to be more prepared to deal with the proposed tariffs, and I believe that it will risk a harsh response towards the United States if it insists on imposing these tariffs and considers them tantamount to sanctions, according to the slogan.
He stresses that if Trump imposes these duties that he pledges, it is natural that the sales of European companies will decline, which will inevitably lead to a direct decline in their stock prices.
European companies will also face an additional problem if Trump implements this step. Chinese companies will sell their goods at lower prices, which will constitute intense competition for European goods, and this will lead to an additional decline in their sales, in addition to the decline resulting from US customs tariffs.
Al-Shaar concludes his talk with the “Eqtisad Sky News Arabia” website by saying: In my opinion, both the European Union and the Trump administration are aware of the potential consequences from both the commercial and political standpoints. I believe that negotiating and obtaining exceptions will be the path that Trump will adopt, especially since he is able to change his views when he sees the possibility of failure or harm in his international relations, as he is a pragmatic and practical person. Therefore, I see that there is an opportunity to reach some kind of settlement that satisfies both parties.
Getting nakedYCustoms rolls
According to a Bloomberg report, the risks of potential trade tariffs resulting from Donald Trump’s victory in the US elections have already been priced into the shares of major European exporters.
This is confirmed by strategists at Barclays Bank, as the research team led by Emanuel Cau wrote in a note last Wednesday: “Tariff concerns were a pressure on EU stocks.” They estimate that an all-out trade war could lead to a significant decline in earnings per share growth.
“Tariff concerns have been a drag on the relative performance of EU stocks so far this year. If a full-blown trade war breaks out, we could see a ‘high-single-digit’ drag on EPS growth,” with Germany, Italy, capital goods, autos and beverages And technology The chemicals most at risk.
Barclays Bank indicated that some European companies It has moved its production to the United States since 2018, which may somewhat limit the impact of Trump’s trade policy on the market as a whole if he is elected. But he is still concerned about the side effects in this case.
On the other hand, the note indicated a recovery European markets If Vice President Kamala Harris wins. Her policy would also promote clean, renewable energy in the region, which has also not performed well given Trump’s chances of victory.
European warnings
For his part, Head of the Global Markets Department at Cedra Markets, Joe Yarak, said in exclusive statements to the “Eqtisad Sky News Arabia” website that the President of the European Central Bank, Christine Lagarde, warned of Trump’s return to the White House, and the repercussions of that on Europe, noting that This may have major negative effects on Europe, especially if it implements the policies it proposes, which are policies to protect the American economy, which include imposing an additional tax (tariffs) of 20 percent on imported goods (..). Lagarde considered that Trump’s return would have disastrous effects on… Economic relationsDue to the large volume of economic cooperation between America and Europe.
- These protectionist policies and increased taxes on imported products will greatly impact European markets, especially companies that depend on exporting to the United States.
- These policies will not only harm the European economy, but will also reflect on the American economy itself, as the American consumer will bear the burden of these taxes indirectly.
He adds: While countries await the results of the upcoming US presidential elections, the entire world is watching with great concern because these elections will have major implications for the global economy, including the American and European economies.
Stock markets are not immune from these repercussions, as many companies will be “directly” affected by Trump’s protectionist policies, as they are more exposed to those policies through their various export activities.
