The impact of the elections on US economic growth, taxation, the trade conflict and the US dollar would impact corporate earnings and the equity market. Meanwhile, the threat of the US imposing tariffs on EU exports, particularly in the automotive sector, continues to linger. On the currency market, economists at UBS expect the euro to strengthen against the US dollar and a stronger sterling in the coming months.
Key quotes
“All paths point to a weaker US dollar against the euro and a stronger British pound in the months ahead. The election will give investors much to mull over, and a period of uncertainty could help the dollar’s safe-haven status to hold ground.”
“Depending on how the election turns out, various European industries will be affected. On the trade front, export-driven sectors including certain industrial companies, automakers with complex global supply chains and luxury goods brands will be impacted. Should tariff fears reemerge, the market would react negatively as we think this headwind is currently only marginally priced in.”
“US policy direction on healthcare may affect the pharma sector, which includes some of Europe’s largest companies by market capitalization. Given the importance of the US market for their profitability, any election outcome perceived to be unfavorable to drug pricing would affect the sector and the overall European market.”
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