US Elections: Expected Effects on the Italian Market and BTP
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Today American voters will head to the polls to choose the new president. It is essential to assess the possible consequences for the Italian financial market.
In the coming days, we will discover the outcome of the US presidential elections, an event that could significantly influence the Italian financial landscape. In addition to the presidential election, votes will also be held to renew all 435 members of the House of Representatives and 34 of the 100 senators. A victory for Donald Trump and the Republicans would be interpreted as a "red wave," while a win for Kamala Harris and the Democrats would represent a "blue wave"; in all other scenarios, a divided government would emerge. We believe that in "wave" contexts, the economic policies presented during the campaign could be implemented more swiftly, with significant effects on the markets.
Impact on the Italian Stock Market if Trump Wins
Should Donald Trump return to the presidency, some Italian companies, particularly in the defense sector, could benefit. During his term from 2017 to 2021, Trump advocated for an increase in military spending. It is likely that he will exert pressure on European countries to contribute more to NATO, considering a possible increase in the alliance's military spending from 2% to 3% of GDP, especially in light of rising geopolitical tensions, such as the conflict in Ukraine and crises in the Middle East and between China and Taiwan. Companies like Leonardo could see increased investments in this sector. However, the adoption of protectionist policies, such as tariffs, could negatively impact other Italian sectors, such as luxury goods and agri-food, which are heavily exposed to the US market.
Impact on the Italian Stock Market if Harris Wins
If Kamala Harris were to win the elections, some Italian companies could benefit, particularly in the renewable energy and electric vehicle sectors. Harris has demonstrated a strong commitment to sustainability and the energy transition. Companies like Enel, ERG, and A2A could gain greater investment opportunities and collaborations in the United States. In the electric mobility sector, Harris's policies could encourage the adoption of zero-emission vehicles, giving a new boost to this industry. Brands like Ferrari and Stellantis, which are significantly investing in electrifying their range, could take advantage of a more favorable American context for electric vehicles.
Impact on the Italian Bond Market
The election outcome could also affect the Italian bond market. If Trump were to emerge victorious, we expect an increase in inflationary pressures, with the Federal Reserve likely adopting a more restrictive monetary policy, leading to a rise in Treasury yields and a decline in their prices. This context could have repercussions for BTPs, as the increase in US interest rates would make US Treasury securities more attractive. Investors might then choose to withdraw capital from Italian BTPs, resulting in higher yields and lower prices for government bonds. In contrast, with a win for Kamala Harris, significant changes in this area are not anticipate
In the coming days, we will discover the outcome of the US presidential elections, an event that could significantly influence the Italian financial landscape. In addition to the presidential election, votes will also be held to renew all 435 members of the House of Representatives and 34 of the 100 senators. A victory for Donald Trump and the Republicans would be interpreted as a "red wave," while a win for Kamala Harris and the Democrats would represent a "blue wave"; in all other scenarios, a divided government would emerge. We believe that in "wave" contexts, the economic policies presented during the campaign could be implemented more swiftly, with significant effects on the markets.
Impact on the Italian Stock Market if Trump Wins
Should Donald Trump return to the presidency, some Italian companies, particularly in the defense sector, could benefit. During his term from 2017 to 2021, Trump advocated for an increase in military spending. It is likely that he will exert pressure on European countries to contribute more to NATO, considering a possible increase in the alliance's military spending from 2% to 3% of GDP, especially in light of rising geopolitical tensions, such as the conflict in Ukraine and crises in the Middle East and between China and Taiwan. Companies like Leonardo could see increased investments in this sector. However, the adoption of protectionist policies, such as tariffs, could negatively impact other Italian sectors, such as luxury goods and agri-food, which are heavily exposed to the US market.
Impact on the Italian Stock Market if Harris Wins
If Kamala Harris were to win the elections, some Italian companies could benefit, particularly in the renewable energy and electric vehicle sectors. Harris has demonstrated a strong commitment to sustainability and the energy transition. Companies like Enel, ERG, and A2A could gain greater investment opportunities and collaborations in the United States. In the electric mobility sector, Harris's policies could encourage the adoption of zero-emission vehicles, giving a new boost to this industry. Brands like Ferrari and Stellantis, which are significantly investing in electrifying their range, could take advantage of a more favorable American context for electric vehicles.
Impact on the Italian Bond Market
The election outcome could also affect the Italian bond market. If Trump were to emerge victorious, we expect an increase in inflationary pressures, with the Federal Reserve likely adopting a more restrictive monetary policy, leading to a rise in Treasury yields and a decline in their prices. This context could have repercussions for BTPs, as the increase in US interest rates would make US Treasury securities more attractive. Investors might then choose to withdraw capital from Italian BTPs, resulting in higher yields and lower prices for government bonds. In contrast, with a win for Kamala Harris, significant changes in this area are not anticipate