One year after the election victory of the "King of Understanding," the market trends of "Trump 2.0" and "Trump 1.0" are highly similar; the bad news is that in the second year, US stocks typically perform the worst.

One year after the election victory of the "King of Understanding," the market trends of "Trump 2.0" and "Trump 1.0" are highly similar; the bad news is that in the second year, US stocks typically perform the worst.

On the first anniversary of Trump’s re-election as U.S. president, market trends are presenting a scene strikingly similar to his first term.

According to Chase Wind Trading Desk, on November 7, Barclays Bank issued a report stating that, in the first year after Trump’s re-election, market performance has almost perfectly replicated the trends after his 2016 first victory: risk assets (especially Bitcoin) surged, emerging markets outperformed the U.S., and the dollar weakened.

However, historical data gives a strong warning: the second year of a president’s term is usually the period when U.S. stocks perform worst and market volatility is highest, as was the case during Trump 1.0 in 2018.

Furthermore, tariff issues remain a sword hanging over the market. Although Supreme Court rulings may have limited impact, associated uncertainties will continue to suppress specific sectors. Fund flows show, despite a large inflow into cash (money market funds), the stock market—especially tech stocks—continues to be sought after, revealing a contradictory mood in the market.

It has been a full year since Trump won the 2024 presidential election again. The global markets have followed a trajectory very similar to what occurred after his first election in 2016. Although policy uncertainty is the main theme of the “Trump 2.0” term, it has not stopped the sharp rise in risk assets.

Barclays Bank believes that, specifically, the market performance over the past 12 months has similarities with 2017 (the first year of “Trump 1.0”), including:

Bitcoin was the top-performing asset in both periods.Stocks outperformed bonds.Regionally, emerging markets/China and Japanese stock markets outperformed the U.S. stock market, while European stocks lagged behind.The dollar declined in both periods.

However, the notable differences should not be ignored:

Gold and Oil: This time, gold prices surged, whereas during Trump 1.0 they were flat; oil prices dropped sharply, the opposite of 2016–17 when oil was one of the best-performing assets.

Sector divergence: Unlike the broad sector gains of 1.0, this time U.S. and European stock sectors have diverged more. In the U.S., tech stocks again led, but materials, real estate, and energy sectors fell. In Europe, financials and utilities performed well, but healthcare, real estate, and materials sectors recorded declines.



A historical wake-up call: The second year of a presidential term is usually the worst year for U.S. stocks

Barclays Bank points out that, despite encouraging returns in the first year, historical data sounds the alarm for the coming second year.

First, reviewing data since 1927, the second year of a U.S. presidential term (the midterm election year) sees the lowest average and median returns for the S&P 500.

Second, the experience of Trump’s first term (2016–2020) also confirmed this pattern. Bitcoin, emerging markets/China, and Japanese stocks, which performed well in the first year (2017), all turned down in the second year (2018). Meanwhile, market volatility spiked; the VIX index soared 71% in 2018. At that time, trade frictions hit the headlines, continuing to pressure economic growth and ultimately leading to a stock market decline.

Currently, global stocks are generally following the trajectory of Trump 1.0. If history repeats, as the November 2026 midterms approach, investors should prepare for potentially higher market volatility.

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The above highlighted content comes from Chase Wind Trading Desk.

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