This podcast episode explores the potential impact of the upcoming U.S. presidential election on European equity markets. The speakers discuss the close ties between the U.S. and European economies, highlighting the concern of European investors regarding trade policy and tariffs. They note that while there is a risk of higher tariffs on European goods, the impact is likely to be nuanced as most European revenues in the U.S. come from services or locally produced goods. The speakers also analyze the performance of European stocks in relation to potential election scenarios, noting that stocks with high potential risk exposure to Trump administration policies underperform while those with high potential positive exposure outperform. They also discuss the potential impacts of a Trump administration on China and Europe, highlighting the likelihood of more protectionist trade policies. Overall, the speakers conclude that while aggregate exposures in Europe to potential policy changes are relatively low, stocks that are most exposed are already reflecting those exposures.
