Trump tariffs would trigger more volatility in Europe than US, JPM says

Investing.com -- JPMorgan analysts said in a note Thursday that a potential victory for former President Donald Trump in the 2024 U.S. presidential election would lead to new tariffs, creating more volatility in European markets than in the United States.

The bank believes that European equities, particularly those in export-oriented sectors, would be most affected by these trade policies due to the region’s reliance on global exports.

In the event of a Trump win, JPMorgan anticipates tariffs could be announced shortly after the inauguration on January 20, 2025, “with a greater impact on Eurozone equity index volatilities compared to U.S. equity volatilities.”

They add that a Trump win would likely prompt market participants to readjust their positions across global assets, causing a ripple effect across both U.S. and European markets.

JPMorgan analysts highlight that U.S. equity option markets are currently pricing in “limited risk” for the upcoming election.

They explain that the implied one-day move for the Euro STOXX 50, set at about 1.6%, is relatively modest in historical terms and even lower than levels seen for previous French presidential elections.

In a split Congress scenario, JPMorgan says tariffs could still be implemented, which would likely strengthen the dollar, further impacting European markets.

The bank’s strategists says investors consider trading strategies involving European equity volatility.

JPMorgan’s equity and FX teams believe that a Republican win would benefit U.S. assets in the medium term, bolstered by anticipated tariffs, fiscal leniency, and a strong dollar.

Source: Investing.com