This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in October 2024?
The dust is settling on the 2024 US election, and for many UK investors, keeping an eye on the relationship between US policies and global market trends will be essential.
This election’s outcome will have a lasting impact on international trade and the global economy in the years ahead.
Keep reading to find out what the 2024 US election could mean for your pension.
What happened to stock markets?
In the UK, the FTSE 250 Index rose by almost 2% in November. This brings the year-to-date performance close to +6%.
Source: Google Market Data
In Europe (excluding the UK), the EuroStoxx 50 Index fell by almost 1% in November. This brings the year-to-date performance close to +6%.
Source: Google Market Data
In North America, the S&P 500 Index rose by almost 6% in November. This brings the year-to-date performance close to +27%.
Source: Google Market Data
In Japan, the Nikkei 225 Index fell by -2% in November. This brings the year-to-date performance close to +14%.
Source: Google Market Data
In the Asia Pacific (excluding Japan), the Hang Seng Index fell by around 4% in November. This brings the year-to-date performance close to +14%.
Source: Google Market Data
Emerging US policies
Tax policy changes
A central focus of President-Elect Donald Trump’s second term is likely to be extending or expanding the 2017 Tax Cuts and Jobs Act. Plans include reducing corporate tax rates further. This would potentially lift profits and share prices, especially in sectors like tech and manufacturing. But it may also heighten the deficit, which could influence bond markets and borrowing costs.
Trade and tariffs
The US is likely to return to ‘America First’ policies, focusing on American manufacturing and increasing tariffs on imports, especially from China. This could benefit local manufacturers but may create challenges for multinational companies that rely on global supply chains.
Climate and energy policies
Energy companies could see significant shifts. A Trump administration has historically supported fossil fuels over renewables and might ease regulations on oil and gas production. Meanwhile, companies in renewable energy and electric vehicles could face some difficulties if support from the White House starts to dwindle.
Geopolitical implications
US-China relations will remain a critical factor. Stricter trade policies could reshape supply chains and spark volatility in global markets. Similarly, any shift in US support for allies or international agreements could influence sectors reliant on global trade.
What does this mean for investors?
Most pensions are diversified across a range of asset types and locations, including the US. This means your retirement savings could be invested in company shares, bonds, cash, property and other assets in the region, depending on the plan you’ve chosen. Many UK pensions invest heavily in US companies because they’re some of the biggest - and in recent years most profitable - companies in the world.
This also means they’re tied to the value of the US dollar. When the pound weakens against the dollar, as it has since Donald Trump’s re-election, the value of these US-based investments typically increases when converted back into pounds, which can boost the overall value of pension funds in the UK.
A stronger dollar often reflects broader economic trends, such as higher US interest rates or inflationary pressures, which can introduce risks. UK pension funds relying on dividends or growth from US equities may see weakened returns if US corporate profits are squeezed by higher costs.
In the short term, these policies may see US companies in domestically-focused sectors like construction and retail benefit, but multinational corporations could face uncertainty. The potential continuation of tax cuts could boost corporate earnings but may lead to market volatility if paired with rising national debt.
It’s important to keep your eye on the bigger picture. Remember, your pension is a long-term investment designed to grow steadily over decades, giving you plenty of time to add to your savings, track its progress, and plan for a comfortable retirement.
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
