Impact of the Republican Victory on the Markets
International Markets: Check out the political and economic landscape post-U.S. elections and the outlook for the end of the year and 2025
By Itaú Private Bank
In this month's International Markets, Marcio Brito, Head Investor at Itaú Private Bank International, analyzes the economic landscape following the U.S. elections, highlighting the implications of the Republican victory on global financial markets.
Here are the main highlights:
Political and Economic Landscape
In November 2024, Donald Trump won the U.S. presidential elections, and the Republicans gained control of both the House and the Senate, enabling an ambitious economic agenda with tax cuts, fiscal stimulus, and deregulation. However, there are concerns about inflation and the rising public deficit.
Government Appointments
Scott Bessent was appointed as Secretary of the Treasury. He is an experienced hedge fund manager known for his skills in trading and risk management and could be central to implementing pro-growth economic policies.
Financial Market
The S&P 500 rose 5.7% in November, reflecting investor optimism about pro-growth economic policies, despite uncertainties over trade tariffs and interest rates.
Monetary Policy and Economy
The Fed made a second interest rate cut of 25 basis points due to weak economic data. New home sales fell, and unemployment insurance claims increased, indicating economic weakening. The 10-year U.S. Treasury yield fell to 4.2%.
Cryptocurrencies
Bitcoin rose about 45% since the elections, driven by expectations of greater regulatory clarity and possible institutional adoption under the Trump administration.
Expectations for December and 2025
December will be crucial for congressional negotiations and the approval of cabinet appointments. For 2025, robust growth is expected in the U.S., with sectors such as energy, infrastructure, defense, financial sector, and technology benefiting from Republican policies.
Benefited Sectors:
- Energy and Oil: Deregulation and support for domestic production.
- Infrastructure: Opportunities in construction and transportation.
- Defense: Increased military spending.
- Financial Sector: Possible reduction of regulations like Dodd-Frank.
- Technology: Incentives for innovation and strengthening of internal supply chains.
Watch the full video below:
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