The return of Donald Trump to the White House sets the scene for a wild ride on financial markets over the next four years.
There has already been plenty of activity since the Republican defeated his Democratic rival Kamala Harris in the November elections.
Bitcoin – one of the big ‘Trump trades’ due to the returning President’s newfound support for cryptocurrency – soared past $100,000 for the first time in the weeks after his victory.
The dollar is on the march and the bond markets are in turmoil – as anyone who has seen the sharp fall in sterling and surge in UK borrowing costs in recent weeks will know.
At the same time, stock markets are on the rise with even the seemingly unloved FTSE 100 hitting a record high on Friday.
So, what now for the markets, and how can investors protect themselves – or even profit – from the turmoil?
Donald Trump’s return to the White House – and what he will do in areas such as tariffs and trade as well as tax and spending – is at the forefront of investors’ minds
The threat of Trump’s tariffs
Global events – including geopolitical tensions between China and the West as well as war in Ukraine and tension in the Middle East – will of course play their part.
So, too, will central banks as they decide how far to cut interest rates in the battle against inflation.
But it is the return of Trump – and what he will do in areas such as tariffs and trade as well as tax and spending – that remains at the forefront of investors’ minds.
‘We are looking at a wild four years ahead,’ says Chris Weston, head of research at City trading firm Pepperstone.
Russ Mould, investment director at AJ Bell, says the threat of tariffs are hanging over the global economy.
‘In theory, one way to try to find winners could be to find UK-listed firms that have a big base in America and sell a lot there from those US-based operations,’ he notes.
‘Another option is to hide away and look for firms that have no US exposure and operate solely in the UK or another country.’
If Trump does launch tariffs, and they push up inflation, Mould believes ‘perceived stores of value’ such as precious metals such as gold and silver and precious metals miners may prove a fruitful investment.
‘We are looking at a wild four years ahead,’ says Chris Weston, head of research at City trading firm Pepperstone
‘All of this will depend upon what Trump tries to do, does do, what the effects are, and what policy response, if any, is provoked elsewhere – and then what investors think may happen and how that compares to what is already priced in,’ adds Mould.
David Morrison, senior market analyst at Trade Nation, reckons the FTSE 100 index could be one of the big winners over the next four years.
He believes the dollar will weaken and the surge in the value of US technology stocks – including the so-called ‘Magnificent Seven’ of Apple, Amazon, Google owner Alphabet, Tesla, Nvidia, Microsoft and Meta – may have run its course.
This will leave investors looking for somewhere else to put their money – with the undervalued London stock market a potential beneficiary.
‘I expect this dollar strength to start to diminish after Donald Trump’s inauguration,’ says Morrison. ‘I think that the financial world’s obsession with US exceptionalism in terms of its economic strength will start to diminish.
‘I think that investors will wake up to the lack of breadth in the US stock market, with the overvaluation of the tech titans, which have done all the heavy lifting in driving US stock indices to record highs in 2024, becoming apparent.
‘Bond yields will pull back as investors push the Fed to cut rates aggressively to stem a falling stock market and dollar-denominated commodities and the companies that mine them, will be back in demand. If so, this dynamic may even help our dear-old FTSE 100 spring back from the dead..’
Amid the uncertainty, we asked Wall Street and City experts for tips on where to invest with the return of Trump.
They have offered investment ideas for brave investors who are willing to take a risk as well as tips for the more cautious.
Shares and other investments can go down in value as well as up, and following tips always involves the risk of losing some or all of your money, so it’s a good idea to do your own research before investing.
Bitcoin – one of the big ‘Trump trades’ due to the returning President’s support for cryptocurrency – soared past $100,000 for the first time in the weeks after his election victory
What the experts say
VICTORIA HASLER, HEAD OF FUND RESEARCH AT HARGREAVES LANSDOWN
For the cautious: Troy Trojan
‘Geopolitical risks remain high and the Middle East and Russia-Ukraine situation still unresolved, not to mention trade tariffs looming. In times of uncertainty one investment that tends to do well is gold, which had a fantastic run in 2024.
‘While we wouldn’t necessarily expect returns to continue at this pace, the uncertain outlook combined with increased buying from central banks, particularly in emerging markets, means that the commodity could continue to enjoy support.
‘The managers of the Troy Trojan fund manage to take advantage of the attributes of gold without putting all their eggs in one basket. Rather than trying to shoot the lights out, the fund aims to grow investors’ money steadily over the long run, while limiting losses when markets fall.
‘The fund is focused around four ‘pillars’. The first contains large, established companies the managers think can grow sustainably over the long run.
‘The second is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises.
‘The third pillar consists of gold-related investments, including physical gold, which has often acted as a safe haven during times of uncertainty.
‘The final pillar is “cash”. This provides protection when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.’
For the brave: Artemis US Smaller Companies
‘The change of US president will bring about a change in US policy. One of the most talked-about is increased tariffs, particularly in relation to China.
‘While tariffs are seldom a good thing for growth overall, they could potentially be good for US smaller companies because trade tariffs favour domestic businesses over international conglomerates, and smaller companies are usually more domestically focused.
‘Combined with a more supportive monetary policy stance, it means this year could be a good time to invest in domestic-facing US corporates.
‘The Artemis US Smaller Companies fund seeks out smaller companies with good potential for their share price to grow relative to the risk of the business.
‘The way the manager considers how the US economy is performing to identify sectors that are benefiting from trends is welcome, as well as avoiding the areas that are finding things tough. This should help the fund take advantage of new or changing policies put in place by the new President.’
ISABEL FAIRLIE AND KENNETH WARNOCK, EQUITY ANALYSTS AT CHARLES STANLEY
For the cautious: Microsoft
‘Microsoft, the world’s largest software company, had a comparatively subdued performance in 2024. Although its shares produced a total return of 13 per cent, this lagged both the S&P 500 Index and the broader software sector. Investors have become concerned that Microsoft may be over-spending on infrastructure to support demand for AI.
‘We believe this view could be misplaced as the market for computing capacity to power the fast-emerging range of AI applications remains supply constrained.
‘We believe that Microsoft has a good chance of exceeding revenue and profit expectations as the current year progresses.’
For the brave: LVMH
‘LVMH, a leader in the luxury sector due to its diversification, scale, and impressive track record, is set for a gradual recovery in 2025 after a challenging 2024 with a minus 12 per cent total return, as global consumer spending dropped.
‘The first half of 2025 may still be tough, but we anticipate improvements in the second half. Its significant US exposure should benefit from positive momentum as Trump takes power, and potential Chinese stimulus could boost spending as consumer confidence slowly recovers from all-time lows.
‘LVMH’s valuation is below its ten-year market relative average, presenting an opportunity for the brave.’
CHRISTOPHE FOLIOT, FUND MANAGER AT EDMOND DE ROTHSCHILD
For the cautious: Bank of America
‘As the Federal Trade Commission loosens its grip on the banking sector, investment banking could surge.
‘Of those, Bank of America would be a standout choice – it’s one of America’s most diversified major banks – whose shares are trading at an attractive valuation. Think of it as a fortress built to weather market storms while capturing upside potential.’
For the brave: Schlumberger
‘Schlumberger, the world-leading oil and gas service company, presents a compelling contrarian play in the energy sector.
‘While oil fears have sent energy stocks tumbling of late, as drilling activity ramps up across North America and the Middle East, Schlumberger’s industry-leading technology, digital edge and cash flow should position it well to ride the recovery wave.’
MARK ELLIS, FUND MANAGER AT NUTSHELL GROWTH FUND
For the cautious: Citibank
‘Trump’s policies are expected to focus on cutting red tape and loosening regulations, creating a conducive environment for large-cap US banks to thrive.
‘One standout opportunity is Citibank. It has a strong capital position – and its shares are undervalued, making it a compelling pick in the current environment.’
For the brave: Qualys
‘Qualys, a cloud computing security business, is a high-quality company that’s looking cheap. It’s well-positioned for success, either as an independent company or as a potential acquisition target.’
DAN IVES, MANAGING DIRECTOR AT WEDBUSH SECURITIES
For the cautious: Microsoft
‘Artificial Intelligence changes the landscape for Microsoft chief executive Satya Nadella & co going forward, as 2025 remains the true inflection year of AI growth.
‘It has become crystal clear to us that the monetisation opportunities around deploying AI in the cloud is a transformational opportunity across the industry with Microsoft remaining in the driver’s seat.’
For the brave: Tesla
‘We believe the march to a $2 trillion valuation for Tesla over the next 12 to 18 months has now begun with full self-driving and the launch of Cybercab representing the golden goose.
‘The next step in this broader Tesla strategic vision around the autonomous and AI era begins while this path is accelerated under a Trump White House. We believe Tesla remains the most undervalued AI play in the market today.’
REBECCA MACLEAN, INVESTMENT DIRECTOR AT ABRDN
For the cautious: Ashtead Group
‘Ashtead Group, through its Sunbelt Rentals brand, powers US construction and infrastructure with a vast fleet of over one million rental tools.
‘From small hand tools to large machinery such as cranes and scaffolding, the business provides a flexible and cost-effective way for customers to manage their equipment needs.
‘With 85 per cent of profits in the United States, Ashtead stands to likely benefit from a Trump presidency.
‘The Trump administration is expected to prioritise domestic infrastructure development, manufacturing, and energy production, aligning perfectly with Ashtead’s business footprint. Lower corporation tax and deregulation could provide further benefits the UK listed company.
‘While Ashtead Group’s long-term prospects remain bright, recent challenges have tempered near-term growth. Higher interest rates have dampened construction activity in the US.
‘In addition, the business has witnessed delays in the scaling of mega projects that promise strong earnings visibility over the next five years.
‘Recent weakness in Ashtead’s stock offers a compelling opportunity for patient investors, as improving market conditions and Trump’s infrastructure plans could drive significant rebounds in the construction sector.’
JAMIE MILLS O’BRIEN, INVESTMENT DIRECTOR AT ABRDN
For the brave: Motorola Solutions
‘A public safety company, Motorola has a near global monopoly on land mobile radios (LMRs) – used from organisations such as the police, fire departments and local municipalities – and a growing video surveillance business.
‘These bodies often operate with antiquated technology, so there is a meaningful opportunity as they upgrade to more sophisticated equipment.
‘The incoming administration is likely to be even more supportive in terms of funding support with the company noting that local and state governments are able to find the required funding, even in a more constrained environment for government budgets in the US overall.
‘The company believes this is the strongest demand environment they have seen in the past three years, while it is also benefiting from increased selling restrictions on Chinese vendors – these are likely also to intensify under the Trump administration.
‘The business generates substantial free cash flow with high returns on capital thanks to predictable plus recurring revenue streams alongside substantial pricing power, with the company enjoying a strong track record in investing this cash into organic growth opportunities as well as acquisitions and buybacks.’
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