Trump’s return: Global markets brace for volatility and opportunity
Donald Trump is set to replace Joe Biden as President of the United States. How might this transition in Washington impact global financial markets? We asked analysts for their insights, and there seems to be a consensus: we should expect significant volatility.
On Monday, January 20, Donald Trump will be sworn in as the 47th President of the United States. The Republican previously served in this role from 2017-2021.
“Donald Trump follows a strategy of maintaining uncertainty, so the only certainty is unpredictability. You can only assume ceteris paribus, meaning looking at markets as if initial conditions remain unchanged,” says Piotr Kuczyński, a financial markets analyst at Dom Inwestycyjny Xelion.
America first
Donald Trump's main campaign slogan was "America First." If the president continues in this vein, policies favorable to American businesses should be anticipated. This is particularly significant for Wall Street, the financial hub of the USA.
Trump promises golden times, reinforcing the financial position of the United States not just as a country, but as an empire of numerous private enterprises. No wonder this appeals to investors, as the goal is technological and financial dominance,” says Eryk Szmyd, a financial markets analyst at XTB.
Mateusz Krupa, an equity market strategist at mBank Brokerage Office, recalls that Trump's previous administration was known for pro-business rhetoric, corporate tax cuts, and deregulation. According to Krupa, a renewed focus on stimulating the American economy could favor cyclical sectors like finance, consumer discretionary, and industry, along with sectors such as defense, energy (particularly oil and gas), and infrastructure.
“Trump has repeatedly emphasized U.S. energy independence, potentially creating a favorable environment for companies in the fossil fuel extraction sector. For investors, these offer potential opportunities, but the market must also brace for short-term volatility from impulsive decisions and protectionist policies,” says Mateusz Krupa.
Eryk Szmyd shares a similar perspective. “Investors will likely focus on the energy sector, which may benefit from deregulations and a return to traditional fossil fuels, as well as a revival of the nuclear sector,” says the XTB analyst.
According to Szmyd, American companies' assets could gain from their significant role in the U.S. economy and broader industrial framework. Financial companies such as CBOE Global Markets and Chicago's CME Group might indirectly benefit from heightened global market volatility. Small and medium American companies also stand to gain.
Anti-China policy
The aim of reindustrialization is to bolster the U.S.'s resilience in potential conflicts with China and to decrease the West's reliance on Asian markets. Meanwhile, energy independence and investments in nuclear power aim to support the development of new technologies, such as artificial intelligence. Eryk Szmyd expects that during Trump's presidency, investors will be willing to pay a premium for "made in America" companies with limited exposure to Asia and high resilience to market shifts.
According to XTB's analyst, Wall Street may focus on technology-industrial companies linked to the defense sector and key U.S. investments. This includes not only defense contractors but also firms engaged in the military-industrial complex and infrastructure. Among them are companies like Heico, Curtiss-Wright, Teledyne Technologies, Howmet Aerospace, Palantir, Axon Enterprise, and Parsons, as well as BWX Technologies, which provides solutions for the civilian and military nuclear sector.
Szmyd believes investors will also take an interest in large industrial conglomerates such as GE Aerospace, Honeywell, 3M, or Rockwell Automation. Even if technology companies don't lose their appeal to Wall Street, the XTB analyst suggests they might encounter challenges due to export restrictions and uncertainties related to China. He is confident that issues concerning Taiwan and the Panama Canal will frequently resurface in the context of Washington-Beijing relations. Additionally, the expansion of the U.S. fleet and the development of underwater drones could benefit shipbuilding corporation Huntington Ingalls.
“Just observe the stock prices of companies like Vistra to see that not only Nvidia and the tech sector offer amazing opportunities for investors,” says Szmyd. “Trump also spells cryptocurrency gains, with a positive outlook for bitcoin in 2025,” he adds.
The primary risk highlighted by Mateusz Krupa from mBank is the potential return to an aggressive trade policy, notably toward China.
“Trade wars, which characterized Trump's first term, could again incite market tensions and disrupt global supply chains. Prolonged conflicts may adversely affect export sectors and companies heavily reliant on international markets,” the analyst asserts.
Piotr Kuczyński from Xelion is more optimistic in this regard. “Trump's trade policy won't be as perilous as he suggested pre-election. Tariffs on Chinese products will be selective and significantly lower than the initially announced 60%. The same goes for tariffs on European products. China will likely counter these tariffs with fiscal support; thus, I believe 2025 could belong to Chinese stocks,” Kuczyński tells money.pl.
Safe havens
According to Kuczyński, precious metals deserve attention, a view shared by Mateusz Krupa.
In the face of potential uncertainty, gold and the U.S. dollar may be viewed as safe havens, although the dollar itself is unpredictable, as it weakened significantly due to increased investor appetite for risk during Trump's previous term,” says the BM mBank strategist.
Krupa recommends watching U.S. Treasury bonds, which are traditionally considered safe during periods of heightened risk. Their current yield levels appear attractive, especially compared to the relatively high valuations in the American stock market.
As for the Polish financial market, Piotr Kuczyński believes it will mirror European trends and doesn't foresee Trump's pre-election criticism by Polish politicians negatively impacting Poland-U.S. relations.
“If that were the case, J.D. Vance wouldn’t be Vice President (he referred to Trump as the American Hitler), and Elon Musk, who was once highly critical of Trump, wouldn’t be among the new president's closest collaborators,” the Xelion analyst affirms.
He believes that the most crucial issue for Poland now is to achieve a prolonged ceasefire in the war between Russia and Ukraine. According to him, there's a 50% chance of an armistice.
“It may not only turn out that the war doesn't end, but Vladimir Putin could provoke Trump, escalating the conflict, which would severely harm Poland,” Kuczyński warns.
From a global perspective, Trump's administration could once again challenge the trust in international alliances, destabilizing markets in regions like Europe or Asia. This, as explained by Krupa from mBank, suggests potential turbulence for investors in sectors connected to international trade and emerging markets, particularly those reliant on trade with the USA and China.
