Equities and bonds have proved strong in the wake of US President Donald Trump’s inauguration, despite fears that his presidency would cause a bad reaction in financial markets, says AXA Investment Managers
Chris Iggo, chair of the AXA IM Investment Institute and CIO of AXA IM Core, said: “His message is clear; growth and wealth creation. His approach to securing both might sit uncomfortably with many but it appears to be welcomed by more. It is paying to stay invested. It should pay to be diversified and the opportunities to do that are numerous.”
Iggo said that Trump’s support for artificial intelligence, technology, the oil and gas sector and for deregulation in finance are the nexus of hope for continued stock market performance.
Iggo explained: “What Trump wants to prevent is inflation, or interest rates, or foreign competition messing up that wealth creation. Tariffs, in his mind, will hurt foreign exporters more than US consumers. Meanwhile, he has made a big show of securing promises of billions of dollars from foreign investors. There is a huge amount of goodwill towards the new administration which, for now, is positive for US markets.”
So far, the fourth quarter earnings season has got off to a strong start, with results beating expectations overall and growth looking to be strong, said Iggo. Sector performance has been more balanced since the beginning of 2025, with industrials and energy the top performers.
Iggo said: “The slew of comments and executive orders from the White House and the fact that tariffs on imports have not been announced yet have all been positive for equities. The bond rally has also helped as it has not triggered any further relative valuation concerns which were emerging in week one.”
However, Iggo cautioned that markets will have to “confront some negatives” at some point, particularly if trade tariffs are imposed on Canada, Mexico and China by the US, which would be negative for US consumers and for the US inflation picture.
He said: “Investors have long held a list of potential risks associated with the new administration. They could still manifest themselves in market volatility and periods of risk-off. The best way forward is to be diversified; European as well as US equities, being ready to play another China recovery, taking advantage of income from bonds and having more duration at these elevated levels of yields.
“Technology, energy in the broadest sense and finance are the key themes to be exposed to.”
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