America comes second in Trump trade analysis

American-focussed companies have come off second best in analysis of the so-called Trump trade that has seen US stock markets rally since Donald Trump won the presidential election last year.

Despite an initial rally in November, domestic US companies have since underperformed companies that earn the majority of their revenues offshore, which have delivered a monthly average of 2 per cent since December, IHS Markit Research Signals analysis shows.

Trump, who campaigned with a slogan of “America First”, has condemned media for failing to report on the rallying Dow Jones, which he touts as a sign of the strength of his presidency.

The Dow Jones Industrial Average pipped 22,000 for the first time in its history this week.

The index is known for its heavy weighting in the tech sector, which is disproportionately represented in the Markit analysis of companies with offshore earnings.

Markit research analyst Simon Colvin says Trump’s claim that his political turmoil has no bearing on US stocks rings hollow with internationally-focussed shares offering a hedge against the domestic uncertainty.

“The desire to gain shelter from a turbulent domestic environment isn’t the only likely tailwind for US cosmopolitan stocks. The falling dollar has made export-dependent companies more competitive, and boosted the value of foreign profit streams.”

Short sellers are also 10 per cent less exposed to internationally-exposed US companies, the Markit analysis finds.

Colvin says this indicates the rally over the last few months may still have legs.