Donald Trump is once again President of the United States after his defeat in 2020, despite challenges related to his political legacy and ongoing legal controversies. His campaign effectively capitalized on widespread dissatisfaction with the Biden administration, particularly on economic issues. His victory has not only strengthened his grip on the Republican Party but has also marked a realignment in U.S. politics. Trump’s election immediately triggered an average rise in U.S. stock prices, while major international markets experienced a contraction. European indices, in particular, showed a negative performance. Among the main beneficiaries of this trend were U.S. mid and small-cap companies, buoyed by expectations of tax relief promised by the new administration. At the same time, the dollar strengthened. However, these market movements appear to reflect an emotional reaction, which may be temporary. The sustainability of these trends will depend on the actual economic measures the administration will be able to implement.
Currently, analyst consensus anticipates higher inflation in the U.S., a less accommodative monetary policy, an increase in public deficit, and rising bond yields. However, the concrete impact of the announced policies remains difficult to predict with certainty.
Financial Market Performance
In November, Wall Street extended its rally following Trump’s victory. The S&P 500 index recorded a +5.30% increase, driven primarily by the banking sector, while the Nasdaq gained +5.40%, supported by stocks like NVIDIA and Tesla. Conversely, European markets closed lower: the Euro Stoxx 50 declined by -1.50%, the FTSE MIB by -2.80%, while the DAX moved against the trend with a +1.90% gain. The Swiss market also showed a negative trend, with the SMI index falling by -1.70%.
On the bond front, interest rate normalization is progressing globally. The decline in central bank reference rates is gradually reducing the yield curve inversion. In December, an additional 25 basis point monetary policy easing is expected in Switzerland, Europe, and the United States.
Future Outlook
Market prospects for the coming months remain generally positive, supported by Trump’s pro-business stance and the continued attention of central banks to economic conditions. However, uncertainty surrounding the implementation of new economic policies remains a key factor to watch.