The final results of the US presidential election are still pending, but according to the latest projections, Donald Trump is unlikely to be beaten. The Republicans have also taken over the majority in the Senate.

In initial commentaries, investment officers and economists from various banks and institutions have commented on what a Trump victory could mean for the economy and the financial markets.

«If the Republicans win both houses of Congress and the White House, we expect a more dynamic US economy with growth above potential and inflation above the Federal Reserve's,» writes Samy Chaar, Chief Economist and CIO Switzerland at Lombard Odier. «Interest rates will then probably be higher than expected before the election. The race for the House of Representatives will decide whether the election promises can be fully implemented.»

Tariffs Crucial for Global Trade

The issue of Trump's repeated threats of tariffs is crucial for global trade and the Fed's prospects of easing monetary policy, the report continues. «We see high yield credit and gold doing well. Global equities, including US equities, also have the potential to rise over the next 12 months as earnings grow and margins remain high. In the US market, financial, technology and defence stocks are likely to perform well under a Trump administration,» the assessment continues.

Trump's return to the White House could boost the US economy, according to Mirabaud economist John Plassard. The focus is likely to be on the energy, defence and manufacturing sectors.

«Trump's economic programme of tax cuts and less regulation could boost US corporate profits, which would benefit the stock market despite concerns about the deficit and inflation,» he continues. «However, this ‹America First› approach could exacerbate geopolitical tensions, particularly with China, and complicate transatlantic relations.»

Year-End Rrally not Inevitable

DWS is not convinced that the outcome of the US election will necessarily lead to a year-end rally on the stock markets. «Even if the underlying sentiment is that the markets would favour Trump's economic policy, there are a handful of reasons not to interpret this election as the cause of a supposed year-end rally,» they stated.

Unlike eight years ago, Trump's win didn't come as a surprise to most investors. Overall, Trump's victory has already been priced in over the past few months. While a reversal of these trades is unlikely, further upside potential for certain asset classes is also limited.

The experts also anticipate a particularly fragile transition period between the election and the inauguration in January, which could cause market volatility.

Reale Implementation and Election Campaign Rethoric

«We also think that the election will not only provide answers in terms of economic policy, but will also raise questions.» These include, for example, how rigorous Trump's measures will be and what concessions he will have to make to Congress or how the national debt will develop. It is also remains uncertain how countries facing potential U.S. trade restrictions will respond.

«In the event of a clear Republican victory, the extension of Trump's 2017 tax cuts is certain,» write the experts at the Franklin Templeton Institute. «What is less certain is whether tariffs will be increased to the extent and scope promised by Trump's campaign rhetoric»

Power Grab verstärkt Unsicherheit

«Trump is aiming for a comprehensive ‹Power Grab› in his second presidency, which will not stop at the neutrality of the US Federal Reserve,» warns the German FERI Cognitive Finance Institute. «Trump wants direct control of interest rate and monetary policy. This threatens the integrity of the US financial system and creates global uncertainty,» writes its head Heinz-Werner Rapp. He sees the future of democratic institutions in the US at risk and expects steps towards a massive concentration of power in the office of the US president.