Global markets under Trump: Build the Wall (Street)!... and China

FILE PHOTO: Chinese Yuan banknotes are seen in this illustration taken February 10, 2020. REUTERS/Dado Ruvic/Illustration

By Marc Jones-NOVEMBER 2, 20202

LONDON (Reuters) - Donald Trump’s campaign slogan in 2016 could have been ‘build the Wall Street’, but a scan across global markets throws up plenty of surprises, especially in the emerging economies that have been in Trump’s cross-hairs.

While the numbers may have been exaggerated by this year’s COVID-19 crisis, most analysts agree that Trump’s tax cuts, combined with low interest rates and the online boom, have made Wall Street a winner over the last four years.

UniCredit's chief economist, Erik Nielsen, highlights how the S&P 500 .SPX has delivered a 65% total return over Trump's term compared with a dismal 14% for Europe's STOXX 600 .STOXX.

Boosted by the pandemic this year, the tech-skewed Nasdaq has done even better. It is up a whopping 110%, led by a stratospheric 285% leap by the ‘FAANGs’ quartet of Facebook, Amazon, Apple, Netflix and Google, that has also driven the value of world stocks up $15 trillion.

Wall Street’s run has been “impressive” said Hans Peterson, global head of asset allocation at SEB investment management.

Trump’s tax cuts have helped somewhat, “though it has really been a combination of things that have worked for American companies”, such as low rates and business models that have led to stronger earnings, he said.

For a graphic on Global markets since Trump’s election:

The other star market of Trump’s presidency, however, is certainly not linked to his policies.

MSCI’s China equity index has jumped the same 65% as Wall Street, thanks to its own tech titans and Beijing’s stimulus that offset the hundreds of billions of dollars of U.S. trade tariffs the agitating White House has put in place.

China's currency, the yuan CNH=CNY=, is also fractionally higher than where it was in November 2016, and the growth of the country's bond markets has seen its government debt join one of the world's most coveted bond indices.

Other emerging markets that were initially in Trump's cross-hairs have had a much rougher ride, although in many cases it has been COVID-19 that has done the real damage, as has been the case with oil LCOc1 and commodity markets.

Mexico's peso MXN=, which slumped nearly 8% the day Trump was elected in 2016, is now down nearly 13%. But it was up nearly 15% from those lows before the pandemic struck, even though the NAFTA trade deal had been shredded and parts of Trump's "big beautiful wall" had gone up.

Turkey's lira TRY=, which came under scrutiny when Ankara was buying Russian-made defence missiles, has collapsed more than 60 percent, though its domestic strains have been the bigger problem.

In contrast, Russia's rouble RUB= had been up until Trump's Democrat rival, Joe Biden, who is expected to take a tougher line on Moscow, began opening a lead in the polls.

For a graphic on Emerging market currencies since Trump’s election: