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From a strictly stock market point of view, the first four years in power of US President Donald Trump have been positive, believes Desjardins Group, which bases its position on the good performance of financial markets.
Yesterday, the portfolio manager and vice-president at Desjardins Securities, Michel Doucet, took stock of the impacts of the decisions of the big boss of the United States on the S&P 500 and the NASDAQ.
“We must separate his political work, that is to say his management of the United States and the world by Twitter, and the financial markets,” said Mr. Doucet.
Compared to 2016, the S&P 500 is up about 65%. The index, which is based on the 500 largest listed companies in the United States, fell from around 2,120 points in November 2016 to around 3,500.
The manager of the cooperative also refers to NASDAQ, which has climbed about 125% since the 2016 election where Donald Trump faced Hillary Clinton. The index has since jumped from 5,150 to 11,700 points.
“Has it been good for the stock markets and investors? The answer is yes ”, concedes Mr. Doucet, adding that the impact has also been positive on the bond markets. “When he won the election, the rates were 1.82%. They are currently 0.74%, ”he continues.
The latter recalls that Donald Trump notably took the decision after his election, with his tax reform, to quickly lower corporate taxes, “which the financial markets had appreciated”.
Some challenges
However, 2018 was a more difficult year. The trade war between China and the United States had rocked stock prices as well as the increase in key rates by the US Federal Reserve.
“Almost every day, the president posted bad words about the chairman of the Federal Reserve on Twitter. He was asking for interest rates to be lowered. What Jerome Powell finally did, and 2019 has been a great year for the financial markets, ”says Doucet.
Finally, in 2020, COVID-19 came to muddle the waters and slow the momentum.
Several governments have decided to put the majority of their activities on hiatus, which has led to a “catastrophic second quarter in terms of economic growth,” notes Doucet, adding that the third quarter saw a significant rebound.
According to the manager, certain sectors of the economy have been more profitable in recent months, such as technology, health, consumer affairs and communications services.
As for the 2020 American election between Donald Trump and Joe Biden, Mr. Doucet believes that it would not be impossible for financial markets to decline from 8% to 12%, over the next few weeks, if there is a uncertainty surrounding the winner.
If Joe Biden wins, he says the markets could appreciate between 4% and 6%.
