 "Donald Trump 2.0 presidency: What it means for stocks, H1-B visa, bitcoin")
Global equity markets are getting prepped for Trump 2.0 with investors, according to analysts, bracing for an expanded use of tariffs under the new administration.
Donald Trump, who will be the 47th President of the United States (US), has already been vocal about his intent regarding higher tariffs, reigniting fears of trade wars with China. H1-B visa and bitcoin, too, have been on his radar.
ALSO READ: Donald Trump inauguration LIVE updates
Here's how leading brokerages have interpreted Donald Trump's latest statements, and what his presidency could mean for trade tariffs, equity markets, crypto, H1-B immigration visa and other asset classes.
HSBC
A 10 per cent universal tariff could have much broader repercussions for global equity markets and may be more difficult for companies to manage its potential headwinds. Nearly 20 per cent of S&P 500 companies’ cost of goods sold are imported, and a 10 per cent tariff could hurt S&P 500 earnings per share (EPS) by as much as 3-5 per cent. LatAm, Europe (ex-United Kingdom) and North Asia as the markets most vulnerable.
Also Read
US materials, autos and semiconductor sectors are a few areas that could benefit. Within the US, consumer sectors could face the most significant headwinds (potential price impact between -6 and -8 per cent) due to their higher import content from mainland China. In China, tech hardware and equipment (15 per cent revenue exposure to the US) and banks (slower loan growth and deterioration in asset quality) could be most exposed.
India was the market where the highest proportion of analysts believed a universal tariff would have no impact on their stocks (95 per cent) and as a result could be a relative outperformer.
Julius Baer
Capital markets are anticipating a relatively benign macroeconomic scenario at a time of unprecedented uncertainty about macroeconomic policies. The Trump administration’s future economic policy agenda is uncertain and contradictory at times. The prospects for reflationary policies under the new president, with higher growth and inflation, reduce the scope for further monetary policy easing. Given the solid economic outlook and sticky inflation, we expect the Fed to keep the federal funds target rate unchanged at 4.5 per cent throughout 2025.
Jefferies
A key issue facing investors at the start of 2025 is the self-evident contradictory nature of the President-elect Donald Trump’s policy agenda and how those contradictions are resolved. It is clearly the case that parts of that stated agenda, be it the threatened imposition of tariffs or cracking down on immigration, seem fundamentally inflationary, a point the Fed will doubtless be aware of.
It is becoming risky to ignore crypto for the many institutional investors who have still not focused on it. This is because the Trump administration’s seeming championing of it means it is about to move into the mainstream. That said, we do not view Bitcoin as a substitute for gold but simply as a digital alternative.
That said, Chinese exporters face potential negative headwinds from tariff-related news flow emanating from the Trump administration. The return of Trump to the White House also offers the opportunity for Chinese companies to signal their willingness to set up production in the US.
Nomura
Trump is likely to largely follow through on his campaign promise to raise the tariff rate on China sharply and to implement broader tariffs against most other trade partners in 2025. Tariffs will take effect throughout the course of 2025, phasing in, as they did in Trump’s first term, rather than being implemented all at once. This should lead to upward pressure on inflation, beginning in Q2-2025 and persisting through the year.
There is a risk that Trump moves more quickly than we expect, raising tariffs rapidly upon taking office leading to a more pronounced inflationary shock early in 2025. We also expect a slowdown in new immigrant arrivals.