Trump's Triumph – How Long Can the Euphoria Last?

A clear victory for the Republican Party in the presidential elections and the majority in the Senate is secured. The Republicans also have a good chance of capturing a majority in the House of Representatives. This so-called Republican "sweep" enables Donald Trump, the 47th President of the USA, to implement his party's agenda without any ifs or buts. This primarily includes tax relief for US companies and new tariffs, especially on Chinese products, but other trade partners must also prepare for so-called punitive tariffs. "America first" is the motto, and this naturally has implications for the entire global economy.

In the short term, US stock markets have reacted very positively to the clear election result, as chaos was avoided and an orderly transition from the incumbent President Joe Biden has already been announced. The outperformance of US small caps immediately after the election is attributed to "America first," as market participants believe this asset class will benefit the most from the announced tax reliefs and trade barriers.

Our research partner, Ned Davis Research, analyzed the performance of the US market in various political scenarios, measured by the Dow Jones Industrial Index, in a study titled "Trump 2.0 and the Markets."

The following table (source: S&P Dow Jones Indices, Ned Davis Research) shows the performance in different market phases based on the Dow Industrial Index (1900 – 2024):

This information represents a market overview and the market opinion of Kathrein. It does not constitute financial analysis and does not include any direct or indirect recommendation for the purchase or sale of securities or an investment strategy. When investing in securities, price fluctuations and thus capital losses are always possible. Information and presentation of past performance do not allow reliable conclusions about future results. Despite careful research, no guarantee can be given for the accuracy of the data used here.