Your MoneyStocktake

Markets stay calm about Trump – for now

Risk is that US voters ‘demonstrate disregard for the constitution, the rule of law and the reputation and role of the US abroad’

Even sober publications such as the Economist are sounding the alarm, describing Donald Trump as the 'biggest danger to the world in 2024'. Photograph: Jordan Gale/The New York Times

Proinsias O'Mahony's face
Proinsias O'Mahony
Tue Dec 19 2023 - 05:00

There have been dire headlines regarding the prospect of Donald Trump becoming president in 2024. Should investors be concerned?

There’s little sign of it. Some US indices are at all-time highs. Volatility is near four-year lows. Most strategists are predicting what they always predict – modest gains for the year ahead.

In contrast, Trump’s lead in the polls has catalysed alarmed media coverage. Supporters dismiss talk of dictatorship and fascism as liberal bias, but even sober publications such as the Economist are sounding the alarm, describing Trump as the “biggest danger to the world in 2024″. Ian Bremmer, head of political risk assessment firm Eurasia Group, agrees the election is a “really big deal”.

Close to home, economist Michael O’Sullivan, formerly of Credit Suisse, cautions that the risk isn’t just that Trump is re-elected, but that US voters “demonstrate disregard for the constitution, the rule of law and the reputation and role of the US abroad”. Risks include a constitutional and political crisis, and upset economic and investment activity, with “losing America” having “enormous implications for bond markets”.

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The risk posed by an increasingly autocratic, vengeful and isolationist Trump shouldn’t be underestimated. Markets are calm today, but expect the investment debate to grow louder if Trump’s re-election odds continue to shorten in 2024.

Donald TrumpCredit Suisse