Markets are increasingly betting on Donald Trump to win the upcoming US election. Standard Chartered believes this will be positive for US equities and the dollar.
There is increasing confidence in a Donald Trump victory in the upcoming US presidential election. Betting markets are indicating a widening gap in favor of the Republican candidate while markets are starting to price in the so-called «Trump trade».
«Trump catches a tailwind,» Standard Chartered said in an investment note. «While the election is still too close to call, a Trump win would likely lead to US equity outperformance and be positive for the USD and gold.»
Republican Versus Democrat Market
According to the note, investors positioning for a Republican ‘clean sweep’ should buy the dollar and stay overweight in US equities, with a preference for small caps (benefitting from tariff protection), financials (potentially higher-for-longer interest rates and deregulation), energy (Trump’s preference for fossil fuel) as well as aerospace and defense.
A Trump victory will also be negative for non-US equities and US bonds, given tariffs on China as well as US allies and the inflationary impact of immigration curbs and higher budget deficits. In contrast, a Kamala Harris win would lift non-American assets.
«The alternative outcome of a Harris victory, with a divided Congress, would be business as usual in the US, relieve geopolitical uncertainty and lift ex-US equities and currencies,» the bank added.
