MENU
 

PRE TAX NTA |$3.75

Value as at close of business on 3 January 2024

Investors ‘comfortable’ about a Trump presidency, despite volatility

Economists and market experts say the outcome of the US presidential election has been largely priced in by investors as softening inflation helps to buoy sharemarkets both globally and locally.

Tribeca Investment Partners lead portfolio manager Jun Bei Liu said the most recent inflation figures in the US had triggered a change in the market’s thinking about what might happen to interest rates in the US.

Market experts and economists say a Donald Trump presidency would usher in more tariffs.

“The market is now thinking there’s a nearly 100 per cent probability of a rate cut in the US in September,” she said.

Liu said investors were therefore starting to buy more cyclical companies – those more exposed to economic activity – which have been the “losing” stocks so far this year, including consumer discretionary companies and property trusts.

“In Australia, we’ve started seeing our discretionary stocks being buoyed by what’s happening in the US, even though the Reserve Bank is not looking at rate cuts,” she said.

Liu said a Trump presidency would be broadly pro business but that it could generate volatility, especially in commodity prices.

‘Markets are, dare I say, relaxed and comfortable about the potential return of Donald Trump to the White House.’ BetaShares chief economist David Bassanese said.

For the past few months, the Australian sharemarket has been swinging between 7500 points and 8000 points. It hit an intraday record high of 8081.6 points on Wednesday.

GSFM market strategist Stephen Miller said there were several reasons why markets seemed to be wobbling.

“The big one is that the centrepiece of Donald Trump’s economic plan is, in essence, unfunded tax cuts,” he said. “With the budget deficit already at 7 per cent of GDP at a time of full employment, financing the deficit might be a problem. I think the market is still getting its head around that.”

Miller also said there were some questions as to monetary policy under Trump.

“Trump has said he’ll let Federal Reserve chair Jerome Powell serve his term, but if he is elected, whoever he appoints to the head of the Federal Reserve board will be a minion, and essentially that means keeping interest rates low,” he said.

And with tariffs on the horizon, Miller said there was some caution from investors.

“Trump has an aggressive tariff plan, but the one thing Trump and [US President Joe] Biden agree on is tariffs,” he said. “If China is the focus of those tariffs, and Chinese growth takes a hit, there’s likely to be a knock on effect to our key commodity exports and miners. Because miners are a disproportionate portion of the Australian sharemarket, that’s going to have a bigger impact on Australia.”

AMP chief economist Shane Oliver said sharemarkets across the world had been working their way up in the past few weeks.

“Markets had a big run up that left them a bit vulnerable to a correction,” he said, noting a weakening in the US labour market, a lack of significant policy stimulus from China, and that profit-taking by investors had dragged down equities in the past week.

AMP chief economist Shane Oliver. Picture: Michael Quelch 

However, Oliver said there was also an element of political uncertainty starting to creep in.

“If it was just a regular Republican presidential nominee and a regular Democrat nominee, then markets wouldn’t be too fussed by it,” he said.

Oliver said markets were also grappling with concerns the US could move to further restrict chip sales to China, and to ramp up in tariffs.

“Trump’s proposed tariffs would have an adverse impact on the Australian sharemarket,” he said. “He’s talking about a 10 per cent tariff on all imports. We only export 4 per cent of our goods to the US, so that wouldn’t have a huge impact, but it would still affect some producers.”

Oliver said the inflation outlook and Trump’s proposed lower tax rates in the US looked to be positives for markets.

“There’s ongoing lower inflation globally, and increasing prospects for more rate cuts, which possibly signals lower inflation ahead in Australia,” he said.

BetaShares chief economist David Bassanese also said the trajectory of inflation looked to be a positive for markets.

“The good news in the US is that in the last couple of months, inflation has resumed its downwards trend,” he said. “And so, markets are becoming confident about the US being able to cut interest rates, which is really buoying global markets including Australia.”

Bassanese said a Trump victory had been priced into markets.

“The only two potential negatives would be if he stoked trade wars with China again, which might hurt some tech companies in the US and do some collateral damage to us, or a possible larger deficit under Donald Trump if he cuts taxes,” he said.

“But I think markets are, dare I say, relaxed and comfortable about the potential return of Donald Trump to the White House.”


This article was originally posted by The Sydney Morning Herald here.

Licensed by Copyright Agency. You must not copy this work without permission.

Disclaimer: This material has been prepared by the Sydney Morning Herald, published on 21 July 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

Recent Posts

Read the latest insights
A curated list of HM1 investor updates, portfolio news and other interesting articles.
Read More
10 top fund managers reveal their long-term stock picks
With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 
Rikki Bannan – Don’t get caught up in momentum
Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.
Professor Jane Butler: Sparking Hope for Spinal Cord Injuries
In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.
Nick Griffin – The Nvidia story is not over
Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.
 

10 top fund managers reveal their long-term stock picks

With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 

Read More
December 28th, 2024
 

Rikki Bannan – Don’t get caught up in momentum

Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.

Read More
December 19th, 2024
 

Professor Jane Butler: Sparking Hope for Spinal Cord Injuries

In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.

Read More
December 10th, 2024
 

Nick Griffin – The Nvidia story is not over

Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.

Read More
December 9th, 2024
 

HM1 CEO Succession

Hearts and Minds Investments Limited advises that Paul Rayson intends to retire from the position of Chief Executive Officer, effective 19 February 2025.

Read More
December 5th, 2024
 

Trump unifies top investors in decade-long bullish outlook for US

Nick Moakes, CIO of the $72 billion Wellcome Trust, told the conference that too many investors were banking on a return to the ultra-low interest rates that prevailed over the past decade.

Read More
November 20th, 2024
 

These rock-star stock picks could get markets talking next year

Eleven rock stars of international and local funds management took to stage – each tasked with picking and pitching one company whose shares will take off over the next year.

Read More
November 18th, 2024
 

Is anyone brave or stupid enough to bet against America?

Stock pickers have been punished for betting against the US. The choice between consensus and contrarianism on American exceptionalism is now harder than ever.

Read More
November 17th, 2024
 

Sohn: NYSE-listed Estee Lauder’s Northcape Capital pick

Northcape Capital’s Fleur Wright this gives a rare opportunity to buy a high quality company at an attractive price.

Read More
November 15th, 2024
 

Sohn ASX stock pick: Ellerston Capital’s Chris Kourtis backs Perpetual

Chris Kourtis has put his biggest bet on embattled Perpetual – picking one of the most hated stocks on the ASX – that he believes will soon be the ‘cheapest listed asset manager of scale in the universe’.

Read More
November 15th, 2024
 

AI start-ups a threat to incumbent big companies

Paul Bassat predicts emerging artificial intelligence companies will disrupt sectors and overtake established incumbent companies just as rapidly as the seismic shifts that took place when the internet emerged in the mid-1990s.

Read More
November 15th, 2024
 

Howard Marks and Sohn’s big stars reveal seven rules for investing

Among the stock picks and stunts at the Sohh Hearts & Minds event, Howard Marks and Nick Moakes provided investors with long-term rules for playing markets.

Read More
November 15th, 2024
 

Sohn investors position for bullish but bumpy Trump ride

Australia and the rest of the world must adjust to a new Trump presidency that will deliver an expected bull market but also disruption, with the leader in waiting prepared to “create pain” to get his way.

Read More
November 15th, 2024
 

Sohn stock picker experts name best shares to invest in for year ahead

‍Don’t overlook down and out silver miners, legacy skincare brands ready for a revival and a big financial company suffering from a severe case of shareholder wealth destruction.

Read More
November 15th, 2024
 

Eleven stock tips from Sohn to get you through 2025

“There’s no finer place for the finance festival than in the festival city,” said Matthew Grounds. He, along with fellow Barrenjoey co-executive chairman Guy Fowler and investor Gary Weiss, is one of Sohn’s driving forces.

Read More
November 15th, 2024
 

Sohn Hearts & Minds Investments fund targets $1.5bn valuation

‍Hearts & Minds Investments chair Chris Cuffe is hoping for HM1 to grow to more than $1.5bn in the next five years.

Read More
November 14th, 2024
 

Galaxy Digital CEO Mike Novogratz believes bitcoin will hit $US100k

Bitcoin’s bounce to record highs in recent days is only the beginning of a fresh surge higher for cryptocurrency, says US billionaire Mike Novogratz.

Read More
November 9th, 2024
 

Why this New York hedge fund manager sees opportunity in European stocks

Influential New York-hedge fund manager Ricky Sandler will turn to Europe for his next stock pick.

Read More
November 6th, 2024
 

Antipodes’ Ross says short-term wealth hinges on US election

The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.

Read More
November 5th, 2024
 

Concentration risk key for investors: Antipodes Partners’ Vihari Ross

The concentration risk in global stock indexes that has built up during the strong rise over the past year must now be a key consideration for global investors, according to Vihari Ross.

Read More
November 5th, 2024
 

The fundie betting big on China – with help from AI

Mr Mehta is sticking to his well-worn strategy: he’s hunting for companies across Asia that aren’t battling intense competition and have management teams focused on costs, cash generation and high payouts to shareholders.

Read More
November 5th, 2024
 

Why this fundie wants you to ‘wince’ at his stock picks

When fund managers come to pitch their favourite stock at the annual Sohn Hearts & Minds conference, there are two ways they can go: they can play it safe, or they can take a risk and shock the room.

 

Read More
October 29th, 2024
 

IFM Investors’ Rikki Bannan backs small cap investments to rebound after mixed performance

IFM Investors executive director Rikki Bannan believes this year could be a good one to invest in some select small cap stocks.

Read More
October 27th, 2024
 

Meet the 2024 Conference Managers

Following a global search, the Conference Fund Manager Selection Committee is pleased to share eleven new managers for 2024. 

Read More
October 22nd, 2024
 

Chris Kourtis is on a winning streak. Here’s his next ASX pick

Chris Kourtis of Ellerston Capital thinks he’s found another winner and thinks it’s the last chance to have a bite at the cherry before the strategy plays out.

Read More
October 21st, 2024
 

Why Ellerston Capital’s Chris Kourtis plans to back a ‘hated’ stock

Chris Kourtis of Ellerston Capital plans to tip one of the “most hated” stocks in Australia when he presents at the 2024 Sohn Hearts & Minds Conference.

Read More
October 21st, 2024
 

Alex Pollak champions rewards of disruptive investment

Alex Pollak’s funds management company Loftus Peak rode the Nvidia wave and he is now looking at more opportunities in disruptive industry stocks.

Read More
October 14th, 2024
 

Buy Hold Sell: 2 Hall of Fame investors analyse each other's best ideas

Hall of Fame alumni Chris Kourtis of Ellerston Capital joins Livewire to analyse high conviction stock picks.

Read More
October 11th, 2024
 

Sumit Gautam - Why AI won't deliver in 2025 | Scalar Gauge

Sumit Gautam is the Founder of Scalar Gauge and speaks with Equity Mates ahead of his appearance at the Sohn Hearts & Minds conference.

Read More
October 8th, 2024
 

Missed out on Nvidia and Ozempic? This fundie says it’s never too late

Northcape Capital’s Fleur Wright is still kicking herself for not owning market darlings Nvidia and Novo Nordisk, the maker of the weight loss wonder drug Ozempic, before shares of those companies rocketed in 2023.

Read More
September 30th, 2024