Investors are closely watching stocks that could be impacted by the outcome of the November 5 U.S. presidential elections, especially those more exposed to government policy actions such as banking and clean energy.
While U.S. President Joe Biden and Republican presidential candidate Donald Trump are locked in a close election rematch, a two-day Reuters/Ipsos poll showed that Trump had opened a marginal lead in the race to the White House after surviving an assassination attempt.
Here is a list of stocks and sectors that are likely to be impacted if either Trump or Biden serve a second presidential term:
FINANCIALS
UBS analysts are accounting for the prospect of less stringent capital and liquidity rules, and easing financial regulation under Trump’s second term as U.S. president, potentially benefiting the banking industry.
Banks, including JPMorgan & Chase (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), Discover Financial (NYSE: DFS), KeyCorp (NYSE: KEY), and Synchrony Financial (NYSE: SYF), are seen as some of the likely winners by the brokerage.
CRYPTO AND BLOCKCHAIN-RELATED COMPANIES
Crypto stocks are expected to benefit from Trump’s re-entry into the White House as he is widely seen as being crypto-friendly.
Stocks, including Coinbase (NASDAQ: COIN), Marathon Digital (NASDAQ: MARA), and Riot Platforms (NASDAQ: RIOT), have surged tracking gains in Bitcoin after a failed assassination attempt on the former president raised his odds of winning the elections in November.
U.S. regulators have cracked down on the industry with a slew of federal enforcement actions under the Biden administration.
SOLAR STOCKS
J.P. Morgan analysts see risks to spending on green energy under a new Trump administration, which is expected to focus more on maximizing fossil fuel output instead of fighting climate change.
UBS expects incentives for solar manufacturers such as First Solar (NASDAQ: FSLR), NextEra Energy (NYSE: NEE), and Sunrun (NASDAQ: RUN) to stay if Biden is re-elected.
CLEAN ENERGY AND OIL COMPANIES
Biden has made protecting the environment a core part of his economic plans.
Continued support for electrification and clean fuel production under a Biden administration could boost stocks such as Eaton (NYSE: ETN), Quanta Services (NYSE: PWR), Tesla (NASDAQ: TSLA), and Air Products and Chemicals (NYSE: ADP), according to UBS.
Existing incentives from the present government will continue to drive advantages for energy-efficient product manufacturers such as Johnson Controls (NYSE: JCI) and Trane Technologies (NYSE: TT), as well as waste management companies with recycling infrastructure such as Waste Management (NYSE: WM) and Republic Services (NYSE: RSG).
However, increased oil and natural gas investment, more drilling activity, and higher natural gas exports could benefit producers such as Exxon Mobil (NYSE: XOM), Cheniere Energy (NYSE: LNG), and ConocoPhillips (NYSE: COP) under Trump 2.0.
DOMESTIC MANUFACTURERS
Both men have broadly used tariffs to protect the U.S. industry. A new Trump administration is expected to be much more protectionist in terms of import tariffs as he has proposed putting a 10% duty on all imports.
As president, Trump started a tariff war with China and as a candidate this year the Republican nominee has suggested he would impose tariffs of 60% or higher on all Chinese goods. Biden has largely kept his predecessor’s tariffs in place and ratcheted up others.
“The consumer discretionary sector is exposed in that environment,” UBS analysts say.
U.S. tariffs on Chinese imports could help domestic manufacturers, namely legacy carmakers Ford (NYSE: F) and General Motors (NYSE: GM), and steel producers such as Nucor (NYSE: NUE) and Steel Dynamics (NASDAQ: STLD), UBS analysts say.
TRUMP-RELATED STOCKS
Investors expect stocks linked to Donald Trump to move in tandem with the chances of his winning the presidency. These include Trump Media & Technology (NASDAQ: DJT), in which the former president owns a majority stake, software firm Phunware (NASDAQ: PHUN), and video-sharing platform Rumble (NASDAQ: RUM).
PRISON OPERATORS
U.S. prison operators such as Geo Group (NYSE: GEO) and CoreCivic (NYSE: CXW) may benefit from Trump’s re-election, on promises of a crackdown on illegal immigration and restrictions on legal immigration, which could boost demand for detention centers.
PHARMACEUTICALS AND INSURERS
UBS sees a lower risk of drug price cuts and an inclination towards Medicare Advantage in a Republican-dominated government, potentially helping drugmakers Eli Lilly (NYSE: LLY) and Merck (NYSE: MRK), as well as health insurers such as Humana (NYSE: HUM) and UnitedHealth (NYSE: UNH).
Control on drug prices was implemented under the sweeping Inflation Reduction Act by Democrats and Biden.
M&A-RELATED BENEFICIARIES
Trump may take a more lenient approach to antitrust regulation enforcement, according to J.P. Morgan analysts.
UBS expects banks such as Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Lazard (NYSE: LAZ), and Evercore (NYSE: EVR), which benefit from M&A activities, to gain from such a policy change.
SEMICONDUCTOR MANUFACTURING
Given the fierce competition with China on semiconductors, UBS expects a second Trump government to drive support for domestic semiconductor manufacturing companies such as Applied Materials (NASDAQ: AMAT), KLA Corp (NASDAQ: KLAC), Intel (NASDAQ: INTC), and Texas Instruments (NASDAQ: TXN).
AGRICULTURE
With the likelihood of more tariffs on Chinese imports under Trump, farmers are expected to receive more federal assistance for lost exports amid a potential trade war. These initiatives could help agricultural equipment makers and suppliers such as Deere and Co (NYSE: DE) and Tractor Supply Company (NASDAQ: TSCO), UBS analysts say.
(Source: Reuters)
