Trump's approach to economic policy, often conveyed through provocative rhetoric, will likely continue introducing volatility into the markets.
Recent indications suggest that Trump may initially adhere closely to his campaign promises if re-elected. However, it is likely that a pragmatic approach will eventually dominate, with policies designed to prioritize equity market stability and manage inflation and yields effectively. The UK market has recently demonstrated the potential consequences of slipping confidence, including surging long-end Gilt yields, a declining GBP despite higher yields, and underperformance of rate-sensitive equities like Small Caps.
While Europe may be poised for positive surprises, Barclays' strategists remain skeptical about it outperforming the US, particularly given the significant role of Big Tech in US indices.