European stocks have hugely outpaced Wall Street in the month since President Donald Trump took office.
This is a blow to the President, who has often boasted about how the stock market sees bumper gains when he is in the White House.
The benchmark Stoxx Europe 600 Index, which tracks the performance of the 600 largest companies in Europe, has gained around 5.2 percent since Trump’s inauguration on January 20.
The S&P 500, however, has only gained around 1 percent in the last month.
On Friday, concerns over a slowing US economy and sticky inflation sparked a sell-off. The Dow Jones Industrial Average lost 1.69 percent – its worst losses this year so far – while the S&P 500 fell 1.71 percent. The tech-heavy Nasdaq, meanwhile, dropped 2.2 percent.
The strong performance of European stocks has been driven, in part, by Trump’s decision not to impose immediate tariffs on the European Union.
The US President has threatened to impose sweeping tariffs on Mexico and Canada and has placed an additional 10 percent duty on imports from China.
Uncertainty around potential tariffs on two of America’s largest trading partners, which are currently due to come in early next month, has spooked some investors.
European stocks have hugely outpaced Wall Street in the month since President Donald Trump took office
The EU was braced to be a major target of Trump’s ‘America First’ policies after the President pledged to impose tariffs on the bloc. But so far, they have yet to materialize.
‘For Europe, the trade war bark has so far been worse than the bite,’ Andrew Pease, chief investment strategist at Russell Investments, told The Financial Times.
European stocks are enjoying their best start to the year since the late 1980s and their strongest performance compared to the US in almost a decade, according to Bank of America analysts.
Europe had been underperforming Wall Street for the last several years, largely as a huge rally in tech stocks has been lifting US shares.
Following Trump’s re-election in November, European equities lagged behind the US by the widest margin on record amid expectations of a trade war, the FT reported.
Many Wall Street bankers and business executives were also thrilled at the prospect of a pro-growth administration under Trump.
The President has often taken responsibility for Wall Street’s success.
In 2019, he told reporters that ‘the reason our stock market is so successful is because of me.’
And in a rally speech before the 2020 election, he claimed that there would be a stock market collapse if he did not win. Joe Biden won, and his predicted crash did not materialize.
Business leaders are rattled by the volatility around Trump’s tariff plans
The president-elect at the time received a hero’s welcome at the New York Stock Exchange when he visited in December
Many business executives were thrilled at the prospect of a pro-growth administration when Donald Trump won the presidential election last year, but the enthusiasm is fading for some
In the weeks since Trump has taken office, some investors and business executives are finding their enthusiasm begin to falter amid increased volatility.
Executives have begun to use words such as ‘fragility’, ‘volatility’ and ‘wait and see’ to describe their outlooks for businesses, according to The Wall Street Journal.
But some analysts have expressed doubt over whether Europe’s performance could last through the year, especially if US tariffs were delayed rather than diluted, the FT reported.
Trump has warned that imports from Europe could be next in line.
‘The muscle memory for most investors is that European outperformance can be only for very short periods by small amounts,’ analysts at UBS told the outlet.
