What Trump’s landslide win means for the world | Invesloan.com

Today’s agenda: Fed and BoE rate decisions; German coalition collapses; Wall Street rejoices; AstraZeneca’s China chief detained; and John Burn-Murdoch on incumbents’ bad year

Good morning. Hours ago, Kamala Harris conceded the US election to Donald Trump. The Republican president-elect made a stunning political comeback, increasing his vote share across the country and taking key swing states. His party could end up controlling both chambers of Congress, granting him great power to push through an “America First” agenda. Here’s what all of this means for the rest of the world.

The global economy: Analysts say Trump’s pledge to cut taxes for companies and the wealthy could initially boost growth. But many expect his plans to deport millions of immigrants and impose tariffs on Europe and China to reignite inflationary pressures. The IMF estimates they could erase 0.8 per cent from economic output next year and 1.3 per cent in 2026. Europe, which sells a fifth of its total exports to the US, is acutely vulnerable. An up to 20 per cent tariff on imports, including on German cars, would hit the region’s “already fragile” economy, said experts.

• Stress test for trade: Trying to close current account deficits with tariffs could cause serious damage, writes Alan Beattie.

Foreign policy: European leaders vowed to work with Trump yesterday, while their officials privately voiced anguish at the implications of his return. Trump has vowed to stop military aid for Ukraine and threatened to withdraw US support to Nato allies who fail to spend enough on defence. He is also expected to be more supportive of Israel’s wars in the Middle East than Joe Biden has been. Trump’s views on Iran and its nuclear programme, and military support for Taiwan, are less predictable.

• New world order: Trump’s return speaks to the declining appeal of liberal democratic values in the west and will radically alter America’s global role, writes the FT’s editorial board.

Markets: Wall Street stocks hit a record high yesterday and US Treasury yields reached their highest levels since July, while Japanese equities rose and the yen weakened further this morning. Other winners included bitcoin, oil and gas and Tesla’s shares, which surged nearly 15 per cent yesterday. US bank stocks also jumped as investors bet on looser regulation and interest rates staying higher for longer, while the prospect of a dealmaking revival pushed up private equity groups. The day’s big losers: renewables and tariff-exposed sectors such as shipping.

• Ominous signs: Markets called the election correctly, writes Katie Martin, but the alarming drop in bond prices signals simmering tension over debt levels.

In the coming days, we will have more analysis on the far-reaching repercussions of Trump’s second term, including in our White House Watch newsletter. Sign up here. Here’s more on his landslide win:

Don’t miss today’s Big Read below on how Trump redrew America’s political map. And here’s what else I’m keeping tabs on today:

• Monetary policy: The Federal Reserve and Bank of England are expected to cut interest rates today. Read Chris Giles’ commentary on what Trump’s return means for central banks.

• Results: Air France-KLM, Banca Generali, BT, Halliburton, Moderna, Rheinmetall, Sainsbury’s and WK Kellogg report.

Thank you for reading. Did Trump’s return surprise you, or was it expected? Let me know at [email protected], or simply hit “Reply” — Tee

Five more top stories

1. Germany’s coalition government has collapsed after Olaf Scholz sacked his finance minister, plunging the Eurozone’s largest economy into political chaos hours after Trump’s victory. The chancellor said he would table a confidence vote in parliament on January 15, which most observers expect him to lose, paving the way for snap elections in March. We have more details from Berlin.

2. Wall Street is rejoicing over the return of Trump and a Republican-controlled Senate as US bankers, private equity titans and other financial services executives salivate over the prospect of deregulation, a wave of new financial products and the departure of aggressive Biden administration watchdogs. More details here.

• Big Tech: The CEOs of Amazon, Apple, Google, Meta and Microsoft rushed to congratulate Trump yesterday, with the sector hoping for more permissive stances on deals, antitrust and AI.

3. US prosecutors are discussing how to drop two federal criminal cases against Trump as he prepares to return to the White House, according to a justice department official familiar with the matter. Special counsel Jack Smith, who oversees the cases, is weighing how to wind them down given “long-standing department policy that a sitting president can’t be prosecuted”.

4. AstraZeneca’s China chief has been detained by Chinese authorities over the past week, the drugmaker told the Financial Times. The FTSE 100 company also confirmed that two other current executives in the region and two former executives are under investigation. Read the full story.

5. Europe’s winter gas supplies are at risk from market disruptions. Analysts say the European gas market is now more connected than ever to volatile global energy markets as a result of its forced diversification from Russian pipeline gas to liquefied natural gas. One trader said: “You just need a few supply disruptions and things could go horribly wrong.”

The Big Read

In the end, it wasn’t even close. A presidential election long forecast to dance on a knife’s edge very quickly turned out to be a rout for Trump. In today’s Big Read, five maps and charts show how the Republican candidate defied conventional assumptions about his support — including among Latino, Black and women voters — and redrew America’s political map.

We’re also reading . . . 

• Carrefour: Faced with stagnating share prices, chief executive Alexandre Bompard is weighing options including disposals to bring the French retailer out of its strategic impasse.

• Saving the NHS: A grassroots project sheds light on how a preventive model could help the UK’s struggling health service cope with rising costs.

• Trump 2.0 reads: Gideon Rachman and Frederick Studemann select some of the best books for understanding the former president’s return to power.

Chart of the day

The Democrats have joined Britain’s Tories and Japan’s Liberal Democrats in 2024’s graveyard of incumbents. The economic and geopolitical conditions of the past year or two have created arguably the most hostile environment in history for incumbent parties and politicians across the developed world, writes our chief data reporter John Burn-Murdoch.

Take a break from the news

HTSI’s drinks columnist Alice Lascelles was asked to judge the best teas in the world at The Leafies awards. These were the winners.