Pharma shares sway as Trump hints at harsh medicine
Market movements as US president-elect meets press underline Trump effect
US president-elect Donald Trump during his press conference at Trump Tower in New York on Wednesday. Photograph: Timothy A Clary/AFP/Getty Images
US investors generally spend their time waiting for dry statistics such as the monthly jobs report, or the torrent of various indices which emerge most days from parts of the American system. Now they have a new factor to contend with. As president-elect Trump spoke yesterday, pharmaceutical shares swayed and even the US dollar was affected. The new administration has promised big policy change, and if it follows through on this it will have an impact on the economy and on various sectors.
So far the financial markets have taken a benign view of the prospect of a Trump presidency, but it remains to be seen if this mood will persist. In many areas the changes which the new administration are promising are fundamental, as opposed to incremental.
As his inauguration approaches, the president-elect shows few signs of pulling back in many areas. In a comment of particular relevance to Ireland, for example, he said that US had “to get our drugs industry coming back” to invest in America. Pharma companies – mainly American – employ some 25,000 people here and together with medtech the total rises to 50,000 plus. They are one of the key pillars of foreign director investment here.
It is unclear what exactly the Trump administration will do, but at very least it could pose a threat to the flow of future investment here in that sector. Meanwhile, promised changes in corporation tax could have a wider impact on FDI moving out of the US.
All these factors influence profitability and stock markets. Trump has promised to be “ pro-business – and the markets have taken this largely on faith. But it is clear that the president-elect intends to do this on his own terms. He will aggressively promote investment in the US, and may penalise those who invest elsewhere.
His trade policy is one area where an early crunch may come. If the new presidency makes some aggressive moves on trade in its early days, it would be one factor which could clearly spook the markets. Investors and analysts do not generally buy the Trump theory that tariffs and an aggressive trade policy can boost growth. In fact, they fear it will do the exact opposite. Interesting times, indeed, and potentially testing ones for a US stock market trading at historic highs.