One year after Donald Trump’s presidential election win, initial market euphoria about tax cuts and infrastructure spending has given way to scepticism, says Investec Asset Management.
Commenting on the one-year anniversary of Mr Trump’s election, Investec Asset Management’s head of multi-asset income John Stopford expressed his views on the “unpredictability” that US President Trump had introduced to global markets since he was elected to office.
“In our view, Trump has so far delivered little, but caused uncertainty and therefore volatility in markets with initial euphoria giving way to market scepticism,” Mr Stopford said.
“Financial markets had made a strong recovery since the GFC, “and in the 12 months since Trump’s election the S&P has returned 23 per cent in local US currency terms.”
However, this recovery was not to be attributed to Mr Trump’s leadership, Mr Stopford indicated.
“The drivers of market strength have been global growth and easy money, rather than a ‘Trump effect’.”
While there were a number of moves that could be made to create a more agreeable environment for markets, the actual implementation did not seem likely, he suggested.
“While there is some possibility of tax cuts and the passing of reforms, the congressional arithmetic behind achieving this remains tricky,” Mr Stopford said.
“Deregulation would be market-friendly but progress remains unclear, and NAFTA remains vulnerable.”
Mr Stopford also pointed to political tensions regarding North Korea, as well as Mr Trump’s “inflammatory rhetoric”, as adding to “the climate of unpredictability”.
“The outlook, in our view, is likely to remain noisy, with risks including the danger of more populism over time if no progress is made on Trump's broader promises,” he concluded.