One global market is already pricing in a Trump victory

• European stocks are pricing in a Trump win, Barclays said.
• Exporters have underperformed the broader European market by 15% since spring.

With the US election less than two weeks away, European stocks have already been pricing in a Donald Trump victory, according to Barclays.

The firm noted that a basket of European exporters — or those companies most vulnerable to tariffs — has underperformed the benchmark European Stoxx 600 by 15% since early spring.

Barclays says this is reflective of investors preemptively bracing for Trump's tariff policy, which has been a cornerstone of his presidential-election platform, under the expectation he will win.

"Tariff concerns have been a drag on EU equities' relative performance year-to-date," Barclays analysts led by Emmanuel Cau wrote on Wednesday. "In the event of a full-blown trade war, we could see up to a high single-digit drag on EPS growth with Germany, Italy, Cap Goods, Autos, Beverages, Tech, Chemicals most at risk."

Barclays did note that some European firms have relocated production to the US since 2018, which could somewhat limit the impact of Trump's trade policy on the whole market. But it's still worried about the possible side effects.

"The second-order impact through lower growth and higher inflation (i.e. stagflation) could be more severe, in particular in the case of retaliation and a trade war," Barclays wrote.

The US will also feel the impact. The firm forecasts Trump tariffs will be a 3.2% drag on S&P 500 earnings-per-share next year, with the most negative impact affecting materials, discretionary, industrials, technology, and healthcare. Beyond that, retaliatory measures would generate an additional 1.5% hit to forward EPS.

The note suggested a possible rebound for Europe's markets if Kamala Harris wins. Her policy would also boost clean and renewables in the region, which have also underperformed on the chances of a Trump win.