29 April 2025
If you are covering Donald Trump’s first 100 days as President of the United States in his second term, please find below a comment from Lindsay James, investment strategist at Quilter, looking at the financial and economic impact of this time, as well as what the future may hold:
“As Donald Trump hits the 100 day milestone of his second term, traditionally a marker that former Presidents have used to highlight progress on flagship legislation, it is now clear that the 47th US President is following his most protectionist instincts whilst acting to centralise and cement power in what looks likely to test the US economy and its constitution to the very limits in coming years.
“Any idea that his confrontational and aggressive campaign rhetoric would be followed by a more measured approach when in office has been truly upended. The sheer speed by which US institutions have been dismantled and others brought under the effective control of the White House has caught even the most cynical by surprise. Moves to silence his critics, impose his authority over of the judiciary and the central bank and even invade his neighbours have only served to underline the direction of travel. The veneer of US ‘exceptionalism’ has been thoroughly routed.
“However, unlike judges, journalists, politicians and rate-setters, the market is one of the few remaining voices that remains unthreatened. When corporates, analysts and the press can no longer voice their concerns clearly and without fear, the market will continue to a good job of being judge, jury and executioner.
“On this note, Donald Trump’s first 100 days have been clear. The US has been the worst performing of all the major indices, whilst the dollar has fallen over 9% against a basket of other developed market currencies. That the US 10-year Treasury yield remains slightly lower than on inauguration day is more a reflection of lower expected economic growth than any improvement in the sanctity and security of US Treasury bonds.
“Conversely, the top performing major region over this period is Europe, followed by the UK, although returns from both these markets remain modest, given the blow that global trade has received. With European rearmament now a clear priority and Germany having upended decades of military and fiscal restraint to approve significant new defence expenditure alongside a €500bn infrastructure fund, the industrial backbone of the old continent is being reforged with a rare degree of urgency. With inflation across the eurozone now within touching distance of the 2% target, interest rates have scope to be cut even further. The ‘Trump Trade’ has well and truly reversed.
“Whilst the US index has recovered some of its earlier weakness in the second half of April, it looks likely that earnings season, beginning in earnest this week, will prompt numerous companies to suspend or downgrade their guidance for 2025.
“The difficulty facing corporates exposed to tariffs is the ongoing uncertainty they will continue to face, clearly a deliberate move by the White House to encourage them to shift jobs to US soil. With reciprocal tariffs suspended until July 8th, there is no certainty they won’t then be reintroduced either partially or in full, or at a later date. Any agreement must be considered temporary whilst businesses decide either to pivot towards more reliable international markets where possible or start the expensive and lengthy process of shifting manufacturing to the US, a permanently higher cost location. Some may do neither, simply battening down the hatches and hoping for a changed stance from the White House as mid-terms loom.
“Either way, the outlook has altered completely since the end of 2024, when investment partners told us that the US was likely to be the best performing region in 2025 and Europe the worst. With diversification meaning that even when the investment community is ideologically aligned, global multi-asset portfolios still spread risk across a range of markets, styles and asset classes. As a result holdings such as precious metals, global value funds and European equities have already contributed meaningfully in 2025. US equities may yet recover further, with a gradual easing of tariffs, tax cuts and deregulation somewhat calming investors nerves in the coming months.
“This means that whilst the bar to moving back to an overweight position in US equities is now higher, in light of the changing political and economic climate, it’s also important not to overreact and lose sight of the corporate excellence that made America great in the first place.”
