Donald Trump’s early days on the job as the new US President were filled with action, from executive orders to statements with strategic signals. Standard Chartered reviews his first week from an investor's perspective.
Global stock and bonds rose in the first seven days with Donald Trump in the White House as the 47th US President. According to a Standard Chartered note, this was due to a less hawkish tariff stance as well as his call at Davos for OPEC to boost oil output and central banks to cut rates.
«The verdict on Trump’s week one: markets have cheered [his] policy.» the bank said. «The US equity volatility index (VIX) fell, suggesting easing investor concerns, after Trump refrained from imposing blanket tariffs against trade partners.»
Bessent in Charge?
Standard Chartered observes that negotiated trade deals imply that Trump may be heeding the advice of business-friendly Treasury Secretary Scott Bessent. The career fund manager believes the most prudent course to achieve the President’s non-inflationary, pro-growth agenda involves stimulating growth with supply-side policies like tax cuts and deregulation, reducing the budget deficit and boosting energy production.
«[Bessent’s] views often contrast with ideological and hawkish positions of many other cabinet colleagues,» the bank said.
Investment Outlook
Moving forward, the bank remains pro-risk in its assets allocation strategy with a preference for US equities and high yield bonds. It believes that US equities will be supported by strong corporate earnings. But it notes that a sustained equity rally will likely require lower US bond yields, a weaker dollar and lower oil prices.
«For that, investors will need to see that Trump’s nuanced tariff threats versus China and neighbors Canada and Mexico are aimed at negotiating trade deals, perhaps even involving a weaker USD, instead of triggering an all-out trade war,» Standard Chartered explained. «We expect the Fed to stay on hold next week until we have more clarity on Trump’s trade, fiscal, immigration and energy policies.»
