What will Trump 2.0 mean for British investors?
Like the man himself, the implications of a second Trump administration for British and European markets are hard to read.
Hopes for liberalisation particularly favourable to the natural resources and financial sectors are tempered by fears that Trump means what he says regarding the imposition of a wave of new tariffs as high as 20% on all US imports, and 60% on Chinese goods.
Europe’s defence sector, at least, would seem to be a clear beneficiary. Trump’s credible threat to withdraw US support for Ukraine, obliging European members of NATO to increase defence spending to more than 2% of GDP, sent the Stoxx Europe aerospace and defence index to a record high the day after the election.
BAE Systems (LON:BA), the UK’s biggest defence company, was up 4.3%, and Rolls-Royce (LON:RR) more than 3.4%. A new report by the European Council on Foreign Relations published on the eve of the election highlighted the EU’s sense of urgency, advocating a dedicated defence production act giving Brussels emergency powers to fund arms production, and reallocate resources towards defence.
Cryptocurrencies also seem a clear winner. Speaking at this summer’s annual bitcoin conference in Nashville, Trump dramatically rowed back on his former scepticism about crypto technologies, promising to make America ‘the bitcoin superpower of the world’ by prioritising domestic production of tokens, and ending the industry’s ‘persecution’ by regulators.
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