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Trump Trade Threat Priced into European Stocks, Barclays Says

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The risk of potential trade tariffs resulting from a Donald Trump US election win has already been priced into shares of major European exporters, according to Barclays strategists.

Strategist Greg Valliere says Trump and Trudeau's rocky relationship in 2017 could worsen in the event of a second Trump presidency.

“Tariff concerns have been a drag on EU equities,” the research team lead by Emmanuel Cau wrote in a note Wednesday. They estimate that a full-blown trade war could result in a high single-digit drag on earnings per share growth. A Goldman Sachs Group Inc. basket of European companies expected to be negatively impacted by US tariffs is down 11% this year, while the pan-European Stoxx 600 Index is up 8.7%.

While a Trump win risks adding to the pressure on European stocks following a shaky start to the third quarter earnings season, the Barclays strategists note potential for a rebound if Kamala Harris wins. Sectors including clean and renewable energy would stand to benefit, having been impacted by rising odds of a Trump win.

 

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