You don’t have to expect this: how the DAX processed the election victory of Donald Trump now to become the new President of the USA and why the shares of Siemens Healthineers and Tesla, among others, are in focus.
It’s official: Donald Trump will be president of the United States (again). But how is the victory of the Republican elections on the German and European stock markets?
At first, European markets reacted calmly to Trump’s renewed presidency. That changed during the day. Germany’s leading DAX index is currently 1.3 percent in the red and stands at 19,036 points. This puts it dangerously close to the 19,000 point mark. The European counterpart, the Euro Stoxx 50, is also down 1.3 percent and stands at 4,809 points.
Trump promised, among other things, high import tariffs and tax cuts for his second term in office. The second was caused by US government bond prices falling as tax cuts risked increasing the budget deficit. Investors could now move funds from US bonds to stocks and other asset classes.
Auto stocks fall significantly in the DAX after Trump’s election – but Tesla is going through the roof
In German stock trading, the auto sector is the clear loser after the US election. Investors here fear punitive tariffs from the United States of America on German imports. BMW’s share is currently trailing the DAX with a loss of seven percent. This was made possible by the disappointing quarterly results of the Munich-based company, which suffered a huge drop in profits. Read more about this here.
However, things went much better for Tesla shares. Trump’s election victory is a celebration for the company – after all, Elon Musk, the main shareholder and boss of the electric car manufacturer, is a big supporter of Trump. It was widely praised during Trump’s victory speech; However, for the success of his space company SpaceX. Tesla shares rose twelve percent premarket – in absolute terms, that’s almost $120 billion.
According to stock expert Andreas Lipkow, Tesla is likely to benefit indirectly from Musk’s political influence. Tesla is one of the so-called “Big Techs” with which the Republican Trump has a “difficult relationship”, as the analyst Sören Hettler of DZ Bank writes, but the shares of the electric car manufacturer do not challenge this.
Siemens Healthineers is the best on the DAX
The annual reports from Siemens Healthineers and Fresenius were much better received by investors. Siemens Healthineers shares are currently at the top of the DAX with an increase of over seven percent, followed by Fresenius with an increase of over four percent.
At Siemens Healthineers, some investors feared that the targets would be missed, but that did not happen, wrote analyst Graham Doyle of the Swiss bank UBS. Fresenius became more positive looking at the current financial year.
With content from dpa-afx
Also read:
Valuations are excessive, says a market strategist – This is how investors should invest now
Or:
Trump’s Portfolio: These Stocks and Investments Could Benefit Now
Interview Between Time.news Editor and Stock Market Expert Dr. Lars Weber
Editor: Welcome, everyone, to another insightful edition of our market analysis series. I’m thrilled to be joined today by Dr. Lars Weber, an expert in international finance and stock market dynamics. Today, we will be discussing the recent election victory of Donald Trump and its implications for the German and European stock markets. Dr. Weber, thank you for being here.
Dr. Weber: Thank you for having me. It’s a pleasure to discuss such a pivotal moment in global politics and its immediate financial consequences.
Editor: Let’s dive right in. The DAX seems to be reacting negatively to Trump’s return to the presidency, currently down 1.3 percent. Can you shed some light on what this means for investors in Germany?
Dr. Weber: Absolutely. The initial calm in the European markets quickly shifted as investors processed the implications of Trump’s policies. The DAX’s significant dip indicates a sense of uncertainty and fear among investors. With potential plans for high import tariffs, particularly on German goods, there’s a genuine concern regarding how this might affect trade relations and corporate earnings.
Editor: That’s interesting. So, it seems the auto sector, in particular, is feeling the brunt of this apprehension. Can you elaborate on why companies like BMW are suffering, while Tesla appears to be thriving despite Trump’s victory?
Dr. Weber: The auto sector is indeed facing significant headwinds. Investors are particularly worried about punitive tariffs that the Trump administration could impose on German imports, which would directly impact companies like BMW. Their recent disappointing quarterly results, showing a huge drop in profits, only exacerbates this situation — a loss of seven percent in their shares is quite substantial!
On the flip side, Tesla is experiencing a different narrative. Trump’s presidency is perceived as a positive for U.S.-based companies, especially one as innovative as Tesla. Elon Musk enjoys a solid relationship with Trump, and the potential for increased investment in American companies could lead to further gains for Tesla, making it a “celebration” for them amidst this chaos.
Editor: It’s fascinating how these dynamics play out differently for competing companies. Looking at the bond market, we see U.S. government bond prices dropping as the threat of tax cuts looms. What does that tell us about investor sentiment and potential shifts in asset allocation?
Dr. Weber: Good observation! The falling bond prices signify a shift in investor sentiment. Many are anticipating an increase in the budget deficit due to potential tax cuts, which makes bonds less attractive. As a result, we might see more funds flowing into stocks and other asset classes, which could lead to further volatility in markets. It’s a dangerous balancing act for investors — they must weigh the risks of each asset type carefully.
Editor: With all this fluidity, what advice would you give to individual investors who are trying to navigate these turbulent waters?
Dr. Weber: It’s crucial for investors to stay informed and to be adaptable. They should consider diversifying their portfolios to mitigate risk and be prepared for potential market swings. Following economic indicators and keeping an eye on both U.S. and European political developments will provide necessary insights into how markets might react over time. Also, focusing on sectors that could benefit from current trends — like technology or renewable energy, exemplified by Tesla — may provide safer havens for investment.
Editor: Great points, Dr. Weber. Before we wrap up, what do you believe will be the longer-term effects of this election victory on European markets?
Dr. Weber: The longer-term effects will largely depend on Trump’s ability to follow through on his promises and how that shapes international trade relationships. If tariffs are imposed, we could see a shake-up in various sectors, particularly automotive. Alternatively, if Trump focuses on domestic growth with less emphasis on international trade, European markets may stabilize after this initial shock. It’s a critical time for investors to stay alert and adaptable to unfolding events.
Editor: Thank you, Dr. Weber, for your insights on this pressing issue. It’s certainly a pivotal moment for markets worldwide. We appreciate your time and expertise.
Dr. Weber: Thank you for having me. I look forward to seeing how these developments unfold in the coming weeks and months.