Trump’s ratings are rising. This is how the financial market reacts
The failed assassination attempt on Donald Trump has had a number of implications for stock markets. Donald Trump is doing well, his ratings have risen and he has become the official Republican presidential candidate. The financial market has reacted relatively calmly to the assassination attempt and, it seems, has already begun to price in Trump’s success.
At this stage of the presidential race, it is possible to determine the probable winners and losers of this year’s race for the White House. It seems that Trump has a better chance of winning. This is most likely negative news for China (continuation of the trade war) and for Europe (pressure on military spending). Poland may be negatively affected by reducing support for Ukraine or pushing the formula of a “rotten” peace treaty.
This would mean that the risk discount for our stock market would remain at a similar level or not fall after the conflict ends. Sectorally, the “green energy” industry in the US could not count on much financial support (Trump is an advocate of cheap energy from “classic” sources). A similar situation applies to the semiconductor industry and Trump’s strong preference for rebuilding the production capacities of companies located in the US (even at the expense of allies in Taiwan).
The US central bank’s informal “pivot” and the beginning of sectoral rotation
The better-than-expected US consumer inflation data has started another phase of sector rotation. Why? Because with lower inflation, the chances of an interest rate cut cycle have significantly increased. This in turn causes investors to shift their interest from technology companies (and quality companies in general) towards lower-valued companies with high debt, which could potentially benefit the most from a rate cut. In short: investors are moving towards so-called “long duration” companies.
