HomeBusinessTrump's Return to the White House: Market Winners and Losers

Trump’s Return to the White House: Market Winners and Losers

By Naomi Rovnick, Amanda Cooper and Dhara Ranasinghe

LONDON (Reuters) – U.S. President Donald Trump’s return to the White House has been met with both relief and disappointment in global markets as investors try to figure out what the next four years will bring.

“The approach will be chaotic, unpredictable, spontaneous and driven by Trump himself,” said Russel Matthews, senior portfolio manager, global macro at RBC BlueBay Asset Management.

Here’s a look at some of the winners and losers to emerge from Trump’s first 24 hours in office.

1/ CALL NAME

Designating Canada and Mexico as potential targets for tariffs took a further toll on their currencies, which fell sharply after Trump’s inauguration speech.

Bets on the Mexican peso or other rate-exposed emerging market currencies were too risky, said Fidelity International multi-asset manager Becky Qin.

“It’s so binary and so dependent on the dollar,” she said. “The policy uncertainty is too great.”

Goldman Sachs strategists said they see a 70% chance that Trump will hit China with 20% tariffs, but said the chances of him making good on his promise of 25% tariffs on Canada and Mexico were slim.

The dollar is trading at its highest level against the Canadian currency in almost five years, with the so-called Loonie also under pressure from economic weakness and expectations for rate cuts.

See also  The Fed's Williams says policy data depends on a highly uncertain environment

Markets have shifted to expectations that China will not allow its tightly controlled currency to weaken to counter heavy U.S. tariffs. Analysts still expect a decline of 5% to 6% by the end of the year.

Fidelity’s Qin said she had a position that would benefit if the offshore yuan weakens further against the dollar, which could be one of the few trades that stands out if aggressive rates spook markets.

2/ ROLLER COASTER

The euro and sterling rose more than 1% on Monday, posting their best single-day gain against the dollar since late November, cheered by Trump’s decision not to immediately impose tariffs.

Still, Tuesday’s decline in European currencies suggested the rebound was already over.

ING currency strategist Francesco Pesole said if more days pass without Europe being explicitly mentioned in Trump’s tariff comments, the euro could benefit.

“That support may prove short-lived, however, as things – as we learned yesterday with Canada and Mexico – can change abruptly due to protectionism, and the euro remains generally unattractive due to some macro fundamentals,” said he.

ABN Amro has cut its year-end euro/dollar forecast from $1 to $0.98, implying a 5% weakening from current levels.

- Advertisement -
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments