Wall Street looks forward to a bonfire of capital and climate rules under Trump
Share:
Profits are poised to dominate in a new era shorn of years of hard-won regulatory restrictions. When some of the biggest banks on Wall Street reveal their full-year earnings this week, they will have more to celebrate than just rising profits. Donald Trump’s presidential inauguration on 20 January – scheduled the Monday after US bank results week – will raise the curtain on a period of looser regulation, lower corporation tax, and weak climate commitments.
These moves are likely to be welcomed by lenders such as JP Morgan and Goldman Sachs, which have already been back-pedalling on net zero promises, and railing against higher capital rules. And if those changes deliver higher returns for investors, shareholders are unlikely to complain. “Investors have already welcomed these prospects given how shares in many US banks have performed since the US election result,” says Dan Coatsworth, an investment analyst at AJ Bell.
JP Morgan, which is expected to report a jump in annual profits on Wednesday, according to UBS, has seen its shares pop 10% since Trump’s victory in November. Shares in Goldman Sachs and Bank of America have risen 13% and 11% respectively. The prospect of Trump’s anti-green agenda could result in further profit growth on the back of fossil-fuel-friendly industries. It comes amid a growing backlash against ESG (environmental, social and governance) goals by US politicians, particularly those on the right of the Republican party. Officials in Texas have started to penalise financial firms that dare to promote their green credentials, with the state’s comptroller having added NatWest to a growing list of firms accused of boycotting its oil industry last summer.
