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Important stories about money and politics in the race for the White House
Donald Trump could impose a slew of new tariffs if he wins next month’s U.S. presidential election, hurting the stock prices of export-sensitive European companies such as automakers and luxury goods groups.
Barclays’ basket of 28 European stocks targeted by U.S. tariffs has fallen 7% since late September as the former president’s chances of winning the election narrow. The basket, which includes Diageo, LVMH and Volkswagen, is down 2% so far this year, while the broader European stock market is up 8%.
The decline comes as Trump’s pledge to launch a trade war if he wins a second term in the White House adds pressure on an industry already suffering from a weak domestic economy and slowing demand from China, a major market. It shows that it is added.
“These sectors are facing the triple whammy of the Trump effect, stagnant EU growth and China’s slowdown,” said Luca Paolini, chief strategist at Pictet Asset Management.
European stock markets have lagged Wall Street’s massive tech-led rally this year, with the S&P 500 up more than 20%. Many analysts expect President Trump’s tax cuts to boost the U.S. stock market, which could widen the gap further if European exporters suffer.
President Trump has said he would impose steep tariffs on imports, imposing 20% tariffs on Europe and 60% on China, and the IMF says Trump’s policies will jeopardize global growth. I warned you.
Emmanuel Cau, head of European equity strategy at Barclays, said the market is being driven by an increasing likelihood that prediction markets will see Republicans win the presidency and both houses of Congress, securing a so-called red sweep. said.
Cryptocurrency-based exchange Polymarket now predicts that Trump has a 62% chance of winning the presidency, up from 48% a month ago.
“Trump’s trade was full steam ahead last month,” Kaw said.
The resurgence of the so-called “Trump deal” has also boosted the dollar in recent weeks, spurring a sell-off in the U.S. Treasury market as inflation and interest rates are expected to rise due to his tariff-driven policies.
Several Barclays companies generate more than 30% of their revenue in the United States, including Daimler Trucks, chemical group Arkema and Diageo.
But some analysts believe the gloom over European markets is overdone.
Hugh Gimbar, global market strategist at JPMorgan Asset Management, said European markets are trading 40% lower than the U.S., partly reflecting the threat of another trade war. said. “This negative factor now appears to be well reflected in prices,” he said.
Mark Schertz, a portfolio manager at Janus Henderson, said he expects the Republican victory to lead to a broader rally in stocks, which will also benefit European stocks.
“If we can get a clear winner, that would be supportive for the market,” he added.
