After Donald Trump won the presidential elections today, defeating Kamala Harris, wealth managers discuss the impact for the economy, markets and asset allocation.

Donald Trump won a second term in the White House today, getting past the 270 electoral votes he needed to secure his presidency. 

World leaders including France’s Emmanuel Macron, Germany's chancellor Olaf Scholz, Spain’s Pedro Sanchez, Ukrainian President Volodymyr Zelensky, UK Prime Minister Keir Starmer and European Commission President Ursula von der Leyen have congratulated Trump on the victory.

The dollar, bitcoin and Tesla shares all surged yesterday morning in European and Asian time as a result, whilst bond yields moved higher and stocks responded positively in the US. Currencies such as the euro and Mexican peso have been the main underperformers. Gold – a traditional "safe haven" asset – was trading around $2,707 per ounce yesterday, around 8 am London time, off recent highs.

The Republican president-elect's administration is expected to cut regulations on business, focus on cutting illegal immigration, and hike tariffs – not just on imports from China. His term could fuel higher inflation than a Harris administration, with tariff plans, tighter immigration controls and tax cuts being a potential source of price pressure. A Trump administration is also likely to be more favourable towards fracking and fossil fuel energy production, creating uncomfortable relations with, say, the European Union and UK, which have pledged to continue decarbonisation of energy. (There is now a significant energy cost gap between North America and Europe.)

Unlike the Democrats, Trump's Republicans in the House and Senate are also less likely to favour tax hikes; there is uncertainty whether the cuts under a package in 2017 will be sunsetted and discontinued. Another area of possible focus will be the leadership of regulatory agencies such as the Securities & Exchange Commission. Under its current chairman, Gary Gensler, the SEC has favoured a more interventionist approach, such as – controversially – over ESG issues. A Trump administration will likely push back against such ideas.

One issue where there is – with some caveats noted here – a degree of "bi-partisan" agreement (if not explicitly acknowleged) is on the stock of US public debt, at $36 trillion. During the campaign, neither the Republicans nor the Democrats made much noise about reducing entitlement spending – and that's particularly the case on the Democrat side. Under the more populist approach taken by the Republicans under Trump, such arguments appear to make less headway.

Here are some reactions from wealth managers to the results.

Thys Louw, emerging market fixed income portfolio manager at Ninety One 
“Within emerging markets, despite a stronger dollar and higher treasury yields, we note that the reaction has not been as broadly negative as feared. Looking ahead, several key events over the next few days could help shape the short-term outlook for emerging markets in the face of trade and tariff uncertainty, namely the Chinese National People’s Congress (NPC) meeting, which will give guidance on the size of Chinese fiscal support; the November US Federal Reserve meeting; and finally a 30-year US treasury auction, which will be important in providing an anchor for longer dated treasury rates.”

“Initial market reaction in emerging markets to Trump’s victory has been measured. With some weakness in China and Mexico due to concerns over potentially higher tariffs, but strength in markets which might benefit from a shift in supply chains such as India and Malaysia,” Archie Hart, emerging markets equity portfolio manager at Ninety One, added.

Justin Onuekwusi, CIO of St James’s Place
“There is potential for higher short-term volatility in bond markets in the aftermath of the election. We think this is particularly likely around US Treasuries as sentiment adjusts to the result. Possible higher inflation may also cause yields for long-term bonds to rise higher than short-term bonds. This is sometimes seen as a signal for the start of a strong economic period but can also indicate a time of higher interest rates. As the US remains the benchmark for global fixed income, the broader global bond market may feel the ripple effects of this.

“On equities, given Trump’s focus on international negotiations, sectors tied to international trade – particularly tech and consumer goods – may experience more volatility. On the other hand, his emphasis on deregulation and corporate tax cuts could give short-term boosts to industries such as traditional energy, financials, and defence. US smaller companies could be more affected by any post-election volatility but we believe this to be a short-term concern. In our view, the valuation case for global small companies is currently strong and [we] expect over the medium-term US small caps will do well.”

Isabel Albarran, investment officer at Close Brothers Asset Management 
“Over the long term, if Trump delivers on his pre-election rhetoric, we expect his term to be more inflationary than a Harris administration, with tariff plans, tighter immigration controls and tax cuts all potential sources of inflationary pressure. Nonetheless, when it comes to the US Federal Reserve’s interest rate decision tomorrow, we continue to expect the Federal Open Market Committee (FOMC) to deliver a quarter point cut, though the pace of further easing may be more moderate.

“Beyond the US, today’s result is likely to impact international trade, especially with Europe and Mexico, with the Mexican peso likely to suffer. China will remain in the firing line, though this has become a bipartisan issue, with the Biden administration continuing Trump’s hawkish stance. Despite these potential consequences, ultimately, we do not expect today’s result to threaten the US barnstorming economic performance. Aside from October’s soft payrolls, activity has remained robust. With over $1 trillion of fiscal support still to be digested by the economy and the regulatory backdrop on course to ease, growth has a number of backstops. Moreover, the economy, and the stock market, tends to do well in the first year of a presidency, meaning 2025 should be a good year for the US.”

Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management 
“Although market volatility may increase in the short term, investors are encouraged to adopt a long-term perspective, positioning their portfolios to capitalise on potentially significant market reactions. Equities: This election outcome is seen as supportive of US equities relative to global markets, with sectors such as financials and cash-rich companies likely to benefit. Fixed Income: An “America First Reflation” scenario could elevate inflation expectations and prompt a less accommodative Federal Reserve. Markets anticipate an upward adjustment in inflation and term premiums due to tariff impacts and a larger deficit, which would drive higher long-term interest rates. Currencies: Stronger US economic performance and rising interest rates should boost the US dollar. Additionally, safe-haven assets like gold and the Swiss franc are expected to perform well amid heightened uncertainties and potential geopolitical tensions.”

Blair Couper, investment director at abrdn
“Over the longer term, a Trump victory is likely to mean a more lax regulatory environment, escalating trade tariffs and potential attempts to repeal components of the Inflation Reduction Act (IRA). Markets had already been pricing in the likelihood of a Trump victory, however it is looking likely that the Republicans will take a sweep of Congress which will make it easier for the party to enact their policy agenda. Under this scenario, we believe those areas that could come under pressure are companies more likely to be subject to tariff increases and areas of IRA that are easier to repeal, such as European auto manufacturers, electric vehicles, and offshore wind.

“Share prices of US companies with supply chains in China are also likely to react negatively whilst domestic manufacturing and US small and mid-cap companies are likely to outperform. With President Trump at the helm, America also faces elevated inflation risks from these policies so we’re likely to see rate-sensitive sectors react and the dollar strengthen. Areas like financials (i.e. banks) could perform well as rates stay higher for longer. Whilst areas like real estate and growth equities would likely be negatively impacted by higher duration, it is likely that this would be offset by the positive view for markets overall from his policies so we have yet to see whether these sectors would be negatively impacted or not.”

Daniel Murray, deputy CIO and global head of research at EFG Asset Management
“Chinese equities sold off overnight in expectation of more tariffs on US imports from China. While Trump has talked about applying tariffs of 60 per cent on Chinese produced goods, the reality is that they will likely be of the order of 20 per cent to 30 per cent. Expect China to announce more stimulus later this week to try to offset the negative tariff impact, reinvigorate local government finances and diminish the headwind from the ongoing property sector debt overhang. Gold has been inexplicably strong this year but has sold off a bit overnight this morning. A part of the recent strength in the gold price could have been associated with election uncertainty and the widely held belief that the result would be close and contested. In practice, the definitive election result has eliminated a major source of uncertainty, helping to explain the gold price sell off.”

Daniel Casali, chief investment strategist at wealth manager Evelyn Partners
“The positive market reaction is not just about a Trump victory but also the likelihood that Republicans are set to retain the House of Representatives and look likely to take the Senate and therefore control Congress. The combination of a clean sweep victory means tax cuts are likely over the coming year. That will be beneficial for equities as it means lower taxes will boost company earnings. So, the combination of a clear victory along with the impact of those tax cuts, will be beneficial for growth and the equity markets are reacting positively to that. 

“The strengthening dollar is a result of markets already pricing in Trump’s proposal to increase trade tariffs. When trade tariffs went up in Trump One, the dollar appreciated. However, Trump could be using the threat of trade tariffs as a means to an end to get the Chinese to invest more in the US. This means the big surprise in the second Trump administration could be that he actually negotiates a trade deal with China by using this blunt instrument of threatening to raise tariffs. This could work out positively for equities though it is too early to tell for sure at this juncture. A second factor fuelling the stronger dollar is the impact of a Trump win on growth: if growth is expected to be stronger it might mean the Federal Reserve is less likely to cut interest rates as aggressively and may not be as dovish.”  

Ben Lofthouse, portfolio manager of Henderson International Income Trust 
"Whilst the win brings uncertainty for companies in terms of potential tariffs, there has been a general move towards moving manufacturing either closer to or into the US, and a Trump presidency is likely to accelerate that. Mr Trump has campaigned on a mandate that includes further tax cuts for US companies, and less government regulation, which are generally taken positively by investors and, as a result, US domestic companies, are expected to be beneficiaries. Many US companies we have met this year have attributed lower levels of activity due to caution before the election, so there could be an acceleration of activity in the US post the election.

"With regards to inflation globally, if Mr Trump does encourage more oil production in the US (‘drill baby drill’ is one of his mantras) and does succeed in bringing the Ukraine conflict to a close, several commodity markets could see improved supply (fertilizers, wood, oil, gas) which would be positive for many economies. The market is not talking about this because these would be longer-term effects of his presidency. In terms of China. the impact is unclear until we hear more from their own stimulus plans on Friday."