Markets are giving US President-elect Donald Trump the benefit of the doubt. Rather like Brexit, early surprise and discontent has already given way to acceptance and optimism. Brexit was obviously not an isolated event. Voters and investors in another major nation have been dealt a new hand. The view now is, what’s done is done, stop complaining and move on. Oh, and prepare for more of the same, in Europe. Which might not be so bad. Why?

Trump wants to do three significant things for the USA (there are of course others, but let’s focus on this trio); unleash a huge infrastructure spending programme, slash taxes and reduce banking regulation to foster growth and inflation and in his own words make America great again.

Markets welcome the ideas. As a pledge, the first is easily palatable compared to building walls and deporting people. It’s not exactly controversial, unless you think central banks are the only ones who can offer (largely unsuccessfully) stimulus to help markets. If anything, Donald could be just what the world and markets need to bring focus back to government/fiscal stimulus, easing the burden on bloated and struggling central banks.

Boosting corporate profitability and helping squeezed banks are making for a nice recipe so far. If successful, his election might yet prove a major turning point for advanced economies. Should new policy and fiscal stimulus lead to US growth and US inflation which allows the US Fed to keep hiking US rates, normalising monetary policy from its crisis extremes, other countries would surely have to sit up and take note hopefully following suit. So which UK blue-chip are set to benefit?

Firstly, Healthcare (Astrazeneca, GlaxoSmithKline, Shire) has been given a reprieve with Clinton having planned to hurt the sector with drug price caps. Secondly, higher US interest rates would improve decade-long squeezed net income margins for the Banks, while corporate optimism might increase highly profitable corporate work and M&A. The likes of Barclays with more international and investment banking exposure would outperform more domestically focused Lloyds Banking and the Royal Bank of Scotland.

Lastly, excitement about mammoth stateside infrastructure spending is already helping buildings materials (CRH) and suppliers (Wolseley), while many of the Mining giants (Anglo American, Rio Tinto, BHP Billiton and Glencore) have already benefiting from perceived demand for raw materials, base metals in particular. Over and above this, you’d have to assume that once the US growth engine shifts up a gear that support services attached to such spending and everyone else exposed to economic growth would also do well. Hence the broad market rally.

It’s still early days, but with eerily similar hallmarks so far, investor are wary of missing out on what was a stunning post Brexit recovery. We are still nowhere near Brexit. Article 50 still months off yet. The President elect is also still over two months from taking office himself. However markets price in ideas immediately, rarely waiting for confirmation. Hence the need to be involved now, not later. The early bird and all that. What are you waiting for? Get access to our research today so your investing and trading can benefit tomorrow.

Mike van Dulken, Head of Research, 11 Nov