"Wall Street has already priced in a Trump victory," per FORTUNE
"Wall Street has already priced in a Trump victory," per FORTUNE.
"The investor community has shown strong support for Trump," Interactive Brokers senior economist Jose Torres told Fortune, based on his conversations and the general sentiment.
The market has already started to anticipate a Trump victory, with recent analyst reports outlining how his protectionist policies could impact markets. Investors expect a second Trump term would mean import tariffs for companies entering the U.S. market, along with heightened inflation. Trump's proposal for broad tariffs diverges from the free-market approach historically associated with conservative leaders. Yet the market is preparing for the global economic shifts that could arise from a more insular U.S. economy.
In Europe, stocks are already underperforming the broader market, while in the U.S., inflation forecasts have ticked upward as Trump gains in the betting markets. Some analysts are even speculating about the possibility of stagflation. With polls showing a tight race between Trump and Vice President Kamala Harris, prediction markets are leaning toward Trump, shaping market outlooks accordingly.
"Trump win increasingly priced in, but polls still tight," Barclays European equities strategist Emmanuel Cau noted in an analyst report on Wednesday.
Barclays suggests European stocks are underperforming due to investor concerns over the impact of Trump’s tariffs, which could lead to significant earnings hits for European firms. In a potential trade war scenario, Italian and German companies could see substantial declines in EPS growth, Barclays predicts. Sectors like tech and the European auto industry could face similar pressures, according to their forecast.
European stocks "keep lagging, suggesting they may be perceived as the losers from a second Trump presidency," Cau wrote.
Additionally, Trump’s tariffs are expected to increase inflation. "Trump’s proposed tariffs add potential upside risk to inflation if he wins the U.S. election," Bank of America rates strategist Meghan Swiber wrote in a note on Wednesday.