The investor community they've been very, very, favoring Trump based on my conversations and based on just a general ambiance," Interactive Brokers senior economist Jose Torres told Fortune. "The market has already started pricing in a Trump victory. A series of recent analyst notes detail how Trump's protectionist economic policies would translate into market outcomes. Investors expect a second Trump term would mean tariffs on importers hoping to enter the U.S. market and higher levels of inflation.
In Europe, stocks are already lagging the broader market. In the U.S., inflation forecasts have started to trend up just as Trump pulled ahead in the betting markets. Analysts have even started to bandy about predictions of stagflation.
"Trump win increasingly priced in, but polls still tight," Barclays European equities strategist Emmanuel Cau wrote in an analyst note published Wednesday.
For investors, European companies struggling with Trump's tariffs could lead to major earnings hits. In a worst-case scenario in which a full-blown trade war between Europe and the U.S., companies in Italy and Germany could see high single-digit drops in earnings.
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