European equities welcome the presidency of Donald Trump, who will return to the White House with a resounding victory not anticipated in the polls. The stock markets of this continent rise by around half a point, with the British stock market (Ftse 100) leading these increases, with 1%. Some increases that have been relaxing throughout the morning, since they reached 1.5% in the case of the eurozone index. The Ibex 35, however, stands out from this photoand it is the only index in red on Wednesday’s daywith losses of 2%, with mid-session data. The reason for this decorrelation of the Spanish reference is a drop that approaches 5% in national banking entities and the great weight that this segment has within the index.
“During the next few months we will see the policies proposed by Donald materialize, with which we will be able to draw new conclusions. For now, in the four years of his previous mandate, the difference between the Eurostoxx and the S&P 500 was 56% in favor of American companiesthe highest difference in the last 25 years,” they explain from XTB.
“Possible tariffs in the region, which could generate a 1% drop in the GDP of the common area over the next year, would be the fundamental reason for these differences. In fact, companies in the luxury or automotive sectors have suffered in the recent weeks the advantage of the polls that gave Donald Trump as the winner,” they add from the analysis firm.
Antonio Castelar, from iBroker, explains that, although the main European indices have started the session with advances (with the exception of the Ibex), the outlook for this continent is less optimistic, “since the possible reactivation of protectionist tariff and trade policies by of Trump generates concern,” explains the expert.
“While sectors such as European defense could benefit, by being motivated to increase their investments in line with NATO commitments, Sectors with international exposure, such as automotive and manufacturing, could come under pressure“, they complete.
For his part, Thomas Hempell and the Macro and Market Analysis team at Generali AM, part of Generali Investments, contribute: “Historically, equities tend to rise after elections as uncertainty decreases. Therefore, the short-term outlook term are bullish, although the high US valuation and rising real yields could dampen the rally. We see positive 3 and 12 month total returns for both the US and EU, driven by the. macroeconomic fundamentals, central bank easing, and a continued rotation out of technology.”
Regarding his analysis by sector, Hempell recalls that EU export companies (exposed to US tariffs on automobiles, beverages, electronic equipment) have fallen by 13.5% year-on-year “and we do not see no attraction for them or for luxury companies, renewable energy/green energy/ESG. Our trade fear indicator also points to continued risk to EU cyclicals versus defensive ones. Among EU cyclicals, banks could benefit from their domestic nature and their positive correlation with global returns,” he concludes.
Matthew Gilman and Thomas Parmentier, strategists at UBS Global Wealth Management, also predict a worse scenario for the European market: “Although equity fundamentals remain generally favorable, We see less upside for European equities under a Trump presidency. In particular, we see risks to economic growth from trade tariffs and rising US bond yields, which may weigh on valuations. “The positive market reaction so far probably reflects some weakness in European currencies today and that European equities were already down 6% in dollar terms from late September to before the election.”
From Renta 4 they break down the economic panorama that is presented based on the political program presented by the Republicans: “Expect more inflation (higher tariffs, 10% general and 60% China, immigration restrictions with potential upward impact on wages), higher short-term growth (tax cuts) although probably lower in the medium term (due to higher tariffs) and higher rates (fewer Fed cuts, with the market eliminating a 25 basis point drop for the moment from now to 2026). A context that will boost the dollar against the euro. In fact, the greenback is already reaching summer highs.
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