Trump on course for victory: Republican majority in Congress

The US presidential elections appear to be heading towards a clear victory for the Republicans and Donald Trump. The US media have already declared Trump the winner. The Republicans have gained three seats in the Senate and would therefore have the necessary majority. This majority in the Senate would mean that Trump is protected from impeachment proceedings and can push through his agenda, which includes tax cuts and tariffs. As a reminder, Trump has promised a reduction in corporate tax for companies to 15% if production takes place in the USA, and, in addition, tariffs on Chinese products of up to 60 %. There are also signs of a Republican victory in the House of Representatives, although it is still too early for a definitive result.

Market reactions: Optimism despite uncertainties

The stock markets, with the exception of emerging markets, have risen overnight (source: Bloomberg, as at 6/11/2024). The main driver for this is a clear, non-controversial election result. The decline in the emerging markets is likely due to the threat of tariffs, particularly against China. The stock markets could not only benefit from Trump's surprisingly clear victory and the announced tax cuts for companies, but corporate profits in Europe and the US in the current quarter are also likely to be stronger than expected (source: NDR, 4 November 2024). In addition to this is the prospect of further possible interest rate cuts by the US Federal Reserve and the ECB.Bond prices were already falling before the elections and this trend has accelerated (source: Bloomberg, as at 6 November 2024).A possible Republican sweep would probably lead to an even higher US budget deficit and thus to rising yields (falling bond prices).

Bitcoin and the US dollar:New highs and short-term support

The Bitcoin price has risen significantly as Trump has announced his intention to buy Bitcoin as a currency reserve.The US dollar has risen sharply against all other currencies, which we believe is a slight overreaction.Apparently, the markets are expecting a scenario of higher interest rates and a rising budget deficit, which will support the currencies in the short term. We will continue to monitor and analyse developments in order to provide you with sound insights and recommendations.In the coming weeks, it will be crucial to closely monitor the long-term impact of policy changes on global markets.

This information represents a market overview and the market opinion of Kathrein. It does not constitute a financial analysis and does not contain any direct or indirect recommendation for the purchase or sale of securities or an investment strategy.

When investing in securities, price fluctuations and therefore capital losses are possible at any time.

Information and presentation of past performance do not allow any reliable conclusions to be drawn about future results.