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UK investors split over Trump’s effect on market

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Trump's constant tariff threats have damaged his credibility in markets.
Trump's constant tariff threats have damaged his credibility in markets.

UK investors are split over whether Donald Trump’s return to the White House will be good for their portfolios, as analysts debate how the former president’s comeback will effect the market.

Only 29 per cent of UK retail investors said that Trump’s return will be positive for their investments, compared to 31 per cent who disagreed, according to data from JP Morgan’s wealth manager arm Nutmeg.

“Clearly, from the data, UK investors remain in ‘wait and see’ mode, keen to understand what policies will be announced by the next President and their effects,” said Brad Holland, director of investment strategy at Nutmeg.

“The unpredictability, a hallmark of his first term, should remind investors not to pre-empt any decision and stick with their investment strategy before anything is announced.”

Younger investors reported being more optimistic about the impact of Trump’s return on their investment, with 59 per cent positive compared to just 15 per cent of older investors, according to the 1,000 person survey.

This trend was also mirrored in the split between newer investors (43 per cent), compared to more seasoned investors (20 per cent).

The effect of Trump’s infamous 20 per cent tariffs have analysts worried over their effect on the UK market, with British exports to the US totalling £188.2bn in the year to June 2024.

“UK industries exporting goods – like pharmaceuticals (13.9 per cent of total exports), automobiles (12.7 per cent), and mechanical power generators (nine per cent) – are particularly vulnerable,” said Mario Levin, associate director at S-RM.

However, since Trump plans to target Mexico and China particularly harshly with trade wars, there is hope that new opportunities could open up for UK businesses.

“The UK should focus on maintaining market access to the US while capitalising on its comparative advantage in services,” added Levin.

Meanwhile, with half of the FTSE 100’s revenue coming from abroad, a slowdown in UK exports might not hit the stock market as much as expected, with much of the international firms’ business taking place in the US.