Shane Solly: Harbour Asset Management spokesperson on financial markets factoring in Trump winning the presidency

48 hours ahead of the US presidential election, financial markets are gearing up for a Trump victory.

Polls indicate the election result will be close, and some experts are warning people not to adjust just yet.

Harbour Asset Management's Shane Solly unpacks the potential financial implications ahead of election day.

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Episode Transcript

Speaker 1 (00:00):
Shane Sally Harbor Asset Management with US. Now. Hey, Shane,
Hey here that Oh what's a big Oh, I'm Shane,
I'm here for this. Are the markets still picking Donald
Trump to win?

Speaker 2 (00:10):
They are? They are, And certainly we're seeing, you know,
we've seen the market position for a Republican win. What
that means is that Trump winners have been rather to
be outperforming. This is things like the US dollar, gold, crypto,
all the US bank stocks have been pretty hot. They've
run hard. Trump loses, things like the renewable sector, any
think with a tiff risk, US gamement bonds they've been
sold off. So certainly we've seen a real swing towards

(00:34):
Trump winning. We know this is going to take time
to decide, you know, certainly last time round, back in
twenty twenty, it took four days market didn't like it's
pretty VRD. Once we're through that, we saw markets recover.
But this time around, certainly, I think one interesting point
is bondy is these tenure government bond yo is they
used as a sort of a start point for investing.
They've increased three quarters of percent from their low back

(00:56):
in September, so there has been some really big swing heather.

Speaker 1 (01:00):
Now, given that it is really close, and many say
too close to call, how do you reckon the markets
are going to react to different electoral outcomes?

Speaker 2 (01:08):
Now, great question. Look sort of three scenarios of divided government,
which means nobody has really got control. That would actually
see a pretty neutral impact for bond markets and equity markets.
Bond markets, so there's been interest rates and divided government
makes it harder for some of the legislation. See some
of the more extreme parts of the legislation that either

(01:28):
parties talk about to get pushed through, just harder to
put through. So divided government kind of okay, republican clean
sweep that may see these long term magistrates. There's bond
years actually go higher again, just driven by stronger growth,
higher inflation, and possibly the US would reserve not being
so aggressive with its easing cycle. You might actually see

(01:48):
the sheer markets, see a little bit of a rally
in the US. There's tax burden for corporate spen lower.
If we saw a Harris win, we may actually see
long term bond years four and also see the US
sheha market for because that would mean higher corporate tax rates.
May also see a bit of a relief rarely in
terms of tariffs, and certainly we're positioned at harbor for

(02:10):
a range of different scenarios. It's really hard to call
out there.

Speaker 1 (02:13):
If Trump wins and we have an increase in US tariffs,
what does that mean for US?

Speaker 2 (02:18):
Look, I think certainly these evolving international factors that that
increases the risk for New Zealand's economic growth. You know,
if we look at on balance the direct impacts of
tariffs on New Zealand's exports of the US, it is
limited the very heavy skew towards tourism with the US
trade versus the fact that a lot of our agricultural

(02:41):
exports can be moved to a lot of different locations.
They're fungible, easy to move to different locations. So China
is probably the interesting thing here. That's still our largest
export market. If there is a spillover from potential increases
in tariffs in China, that will be an impact. But
of course we're on the cusp of another set of
china is policy stimulus, so there could be a bit

(03:02):
of an offset. So the short answer is we could
actually be It will be a risk, but it may
not be as big as some people.

Speaker 1 (03:10):
Then yeah, okay. Now, on the subject of the stimulus,
it's a big week for central bank policy decisions around
around the world this week. What are we expecting? What
does it mean for us?

Speaker 2 (03:18):
Yeah? Look, we've got central banks responsible more than a
third of the global economy set to hopefully reduce borrowing
costs in the next few days. The US Federal Reserve
due to come out and they are expected to cut
interest rates again instantly. We're seeing this after a long
period of interest rates being increased globally, putting pressure on
global economies, and parts of our economy starting to go

(03:42):
the other way. So certainly this potential for low interest
rates is going to be helpful for our economy and
that's going to be helpful for our sheer market.

Speaker 1 (03:50):
Good stuff. Shane's always good to talk to you mate.
Thank you so much. It's Shane Sley. I will talk
to you next week harbor Asset Management.

Speaker 2 (03:55):
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