What does Trump's election victory mean? With the victory for Donald Trump, it is natural to look at what this means for the financial market and business life in general.
Photo: Donald Trump / Borsen
The question is what effect we can expect on the financial markets in the wake of a Trump victory. This is what Thor Schultz Christensen, deputy investment director at Velliv, says:
The uncertainty is great. But the election of Trump is a signal of new times. My best bet is that today we will see nice increases in the stock market. With Trump behind the desk, there are plans for tax breaks for companies, increased support for several industries, including the fossil industry, and finally, more trade restrictions will give American companies a tailwind. All in all, something that is positive for the companies' earnings, and in the short term this will be reflected in the share prices in the USA.
On the basis of the subsidies that the fossil industry can be expected to obtain, Thor Schultz Christensen believes that i.a. energy stocks will be one of the winners of the election result. On the contrary, he expects that the industries dealing with the green transition may face a tough time.
And in the long term, this can have negative consequences for the economic climate worldwide.
"Our models indicate that a tax in the US of 10% on foreign goods will lead to an increase in inflation of a little more than 1% in the US, which is bad news at a time when inflation remains above the target of 2 % inflation on an annual basis," says Thor Schultz Christensen and continues:
However, the bad news does not stop here. Because when we have to fight rising inflation, the interest rate weapon is the most effective to use. Therefore, we expect that the immediate interest rate cuts will eventually be replaced by new interest rate increases, and thus we will also see a negative effect on growth, not least in the world outside the US, where taxes will hit hard.
The rising interest rates are not good news for Danes with long home loans. This is where the interest rate increases will hit the hardest.
This is how Velliv reacts to the election
The IT industry has entered into an attractive pension agreement with Velliv, which a large number of our member companies make use of, and therefore it is relevant for many to know how Velliv relates to the outcome of the election.
They say that, as a result of the increased market uncertainty, they have taken a neutral position in the market, where, among other things, they have brought down the share of long bonds in the US in light of the higher risk of rising interest rates if Trump is elected.
Source: IT-Branchen
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