After a brief fall on Wednesday following the news that Donald J Trump is to be the 45th president of the US, markets returned to something resembling an even keel on Thursday.
And, while down on Friday, the impact of what has rightly been described as a watershed moment for US politics has been rather muted in financial terms.
This is partly because markets do not yet know how extreme Trump’s policies are going to end up being once they have been filtered through the Washington machine. It is also because there is a growing consensus that US growth is liable to continue on an upward, albeit more inflationary path.
Where there is a lot less consensus is on what his election means on the international stage. In particular for Europe and emerging markets.
As Bank of America Merrill Lynch put it in its latest Europe Economic Weekly note: “A more protectionist America would be bad news for the Euro area even without any direct repercussions on transatlantic trade, through Europe's exposure to emerging markets.”
It added: “It is possible that sentiment indicators could very quickly start taking on board a deteriorated outlook for the world demand, in particular if market conditions take a turn for the worse in key EMs, following the early reaction of the Mexican market.”
According to BAML, this particular transmission channel should be at the top of European policy-makers' concerns right now. But, it is by no means the only threat facing the European project.
As Shaun Port, chief investment officer at Nutmeg put it our sister publication Portfolio Adviser recently: “When you start getting toward the notion that you can rip up trade deals; when you call global trade the main enemy in the US at the moment, that is reversing a 30-year trend toward globalisation and has a potentially damaging impact on emerging markets trading partners around the world.”