It looks like Donald Trump will be the 47th President of the United States. This could trigger a global equity rally, according to Lombard Odier.
Donald Trump has reportedly declared victory in the US presidential election. If this is the case, he will be only the second man in history to serve two non-consecutive terms, alongside Stephen Grover Cleveland (22nd and 24th President).
According to Lombard Odier’s chief economist Samy Chaar in a note, Trump’s victory «looks likely at this stage».
«This has major implications for financial markets,» Chaar said. «The macroeconomic fundamentals remain a tailwind for investments. We see high-yield credit and gold performing well. Global equities, including US stocks, also have potential to rise in the next 12 months, as earnings expand and margins remain high. In the US market, financials, tech and defence should perform well under a Trump administration.»
Race in the Congress
Beyond the White House, there will also be implications from how the Congress will be split with a tight race still in the House.
«If the Republicans sweep both houses of Congress and the White House, we would expect a more high-octane US economy, with growth above potential and inflation above the Federal Reserve’s target. Interest rates are then likely to be higher than pre-election expectations,» Chaar explained.
«The race for the House of Representatives will determine whether campaign pledges can be fully implemented. A divided Congress would place some checks on the President. The question of tariffs is key for global trade and the Fed’s easing prospects.»
