How will the incoming Trump administration affect the markets?

A Trump presidency is likely to bring with it big changes in geopolitics and the global economy, so investors need to take a close look at how the incoming Trump administration will affect the markets — and what to do protect and strengthen their portfolios, Swiss investment bank UBS writes in its Year Ahead 2025 report (pdf).

One winner under the Trump administration will be US stock markets, thinks UBS, which it has backed up with its forecast that the S&P 500 should reach 6.6k points by the end of 2025 — a roughly 10% jump from where the index stands now. In addition to expectations of decent growth, the Fed continuing to cut rates, and the rise of AI — which had all been priced in before the election — the approaching Trump presidency brings with it pledged tax cuts and deregulation that UBS thinks will help support US stocks.

But stock markets elsewhere may not be so fortunate, with Trump’s proposed tariffs — particularly on China — potentially making a big dent in investor confidence. With the president elect already floating a 60% tariff on Chinese goods and a 10% tariff on imports from elsewhere, the bank forecasts the likelihood of market volatility over the pond in Europe and in the world’s second largest economy.

US Bonds are also likely to soon lose their shine, after having seen their yield rise on the announcement of Trump winning the White House earlier this month. The bank is telling investors to lock in return now before more interest rate cuts from the Fed and Trump’s desire to relax fiscal policy facing likely hurdles in Congress sends yields down.

An increasingly strong greenback is also set for a reckoning, according to the bank, with the USD’s post-election honeymoon forecast to be a short-term thing as it becomes apparent that is both overvalued and overstretched.

Gold prices should be back on the up in 2025, allowing the safe-haven asset once again to take its place as an important hedge for investors against inflation, geopolitics, and other concerns. The bank — which advises that investors keep 5% of their investments in gold — sees the previous metal rising to USD 2.9k per oz, a nearly 10% increase from current prices.

MARKETS THIS MORNING-

Asian markets are mostly starting the day off in the red despite US stocks hitting new records the day before, with Japan’s Nikkei leading the pack in the red at -1.3% and Korea’s Kospi at -0.7%. China’s Shanghai index is in the green by 0.3% and Hong Kong’s Hang Seng is up 0.4%.

THE CLOSING BELL-

The ADX remained flat yesterday on turnover of AED 2.2 bn. The index is down 3.6% YTD.

In the green: Adnoc Drilling (+6.9%), Agility (+6.1%) and Al Khaleej Investment (+5.5%).

In the red: Abu Dhabi Aviation (-9.9%), Aram Group (-9.6%) and Gulf Medical Projects (-8.4%).

Over on the DFM, the index rose 1.0% on turnover of AED 814.2 mn. Meanwhile, Nasdaq Dubai closed up 0.6%.

CORPORATE ACTIONS-

#1- Takaful Emarat secured approval from the Securities and Commodities Authority (SCA) to extend the subscription period for its capital icnrease to 6 December, according to a DFM disclosure (pdf). The firm is raising its share capital to AED 185 mn, at an issue price of AED 1 a piece.

REMEMBER- Takaful Emarat kicked off the rights issue to existing shareholders as part of its capital restructuring on 1 November, setting it up to raise its share capital to AED 185 mn, up from AED 25.6 mn, by issuing 159 mn new shares. The firm reduced its capital to AED 25.7 mn by canceling 124.4 mn shares earlier in October as part of a capital restructuring plan the firm revealed in February, aimed at offsetting the AED 132 mn accumulated loss the company had incurred as of 31 December 2023.

#2- Union Coop’s board approved the appointment of Al Tamimi & Co. to conduct a study for the transformation of the company into a public joint-stock company, according to a DFM disclosure (pdf). Last week, we reported that Union Coop had tapped a legal advisor to explore changing its legal status.