Trump’s Presidency: How It Could Impact the Dollar, Stocks, and Global Markets

As Donald Trump is projected to win the U.S. presidency, financial markets are bracing for significant shifts.

The U.S. dollar and stock markets are expected to benefit, while bonds, emerging markets, and sustainable investing could face challenges.

Dollar and Equities

The dollar is anticipated to strengthen, driven by Trump’s pro-growth policies that would likely lead to higher inflation and a need for elevated interest rates from the Federal Reserve. His protectionist stance, including trade tariffs and defense spending, could further boost the dollar as global growth slows. Conversely, the euro and China’s yuan may see declines, while the Japanese yen and Swiss franc may also suffer due to higher yields and increased risk appetite. Cryptocurrencies, particularly Bitcoin, might thrive under Trump’s favorable stance on regulation.

In equities, sectors like banking, technology, defense, and oil are expected to perform well, thanks to tax cuts and deregulation. However, multinational companies may struggle with higher tariffs and trade tensions, particularly in the semiconductor, automotive, and clean energy industries. A strong dollar and rising U.S. rates will also hurt international earnings, with European stocks facing potential downturns.

In bonds, Trump’s fiscal policies are a concern, as they could significantly increase U.S. debt and borrowing costs. The resulting inflation pressures would likely keep Treasury yields high, while growth in Europe and Asia could stagnate due to trade tensions and tariffs.

Commodities

Commodity markets are set to be influenced by Trump’s oil and gas policies. His push for more drilling and less regulation could maintain U.S. dominance in petroleum production, though sanctions on Iran may reduce global supply. Agricultural commodities like soybeans might also face volatility, especially with renewed trade issues with China.

Emerging markets are likely to be hit hard, with Mexico facing potential tariff hikes, and other economies vulnerable to U.S. policy shifts. However, some emerging nations like India and South Africa could benefit from domestic growth and reforms, while key exporters like Chile may remain relatively insulated.

Sustainable investing may struggle under a Trump administration, as his policies favor traditional energy sectors over clean energy. Efforts to roll back green regulations and reduce funding for renewable energy could hurt the growth of the clean energy sector. Additionally, Trump’s potential overhaul of the SEC could dampen efforts for sustainable investing reforms.