Republican Donald Trump surged ahead of Democratic Presidential Candidate Kamala Harris in one of the most highly anticipated US elections in the country's history. Trump's reelection as the 47th US President has already triggered a bullish wave in the US stock markets, as benchmark indices like the S&P 500, Nasdaq, and Dow Jones Futures gained well over 1% after markets opened on November 6. The election results are expected to directly impact US businesses and the overall economy, which could offer a window for American investors to reassess their stock holdings. Trump's policies and agendas have generally been considered beneficial for banking institutions and fossil fuel conglomerates. However, analysts believe that plans to impose high tariffs on all imports and trim taxes for workers and retirees can have unpredictable consequences.
Banking Stocks Are Positioned To Gain From Potentially Lenient Regulations
According to Infrastructure Capital Advisors CEO Jay Hatfield, Trump's reelection will benefit the US financial landscape because he will likely bring back lenient banking regulations. Lighter regulations could facilitate corporate mergers that ensure massive profits for Wall Street banks, including JPMorgan Chase (NYSE: JPM). In his previous term, Trump delivered major corporate tax cuts, which the incumbents welcomed. Furthermore, some industry experts anticipate that another Trump presidency could mean regulators could also scrap the proposed Basel III regulations, which banks have vehemently protested for years. The new rules would mandate banks to set aside higher capital reserves to protect against potential future losses. New York-based investment banking company Keefe, Bruyette & Woods (KBW) forecast that Trump could make up to eight leadership changes at US regulatory agencies overseeing the financial services sector.
Boost To M&As And Crypto Investments
Trump's second term could benefit asset management firms and the private equity sector, which have experienced extreme volatility and unpredictable revenue flow in recent years due to a slump in the M&A market, attributable to the prolonged effects of the pandemic. Companies like Kohlberg Kravis Roberts & Co (NYSE: KKR) stand to benefit from any potential uptick in company acquisitions and IPOs driven by Trump's policies.
Elsewhere, Bitcoin (BTC) surged 6% on November 6 to hover around $73,839 after Trump delivered his victory speech. While the cryptocurrency industry has received a massive boost this year after the US Securities and Exchange Commission officially approved BTC exchange-traded funds, the sector stands to benefit further as Trump has publicly approved and acknowledged the long-term benefits of digital currencies supported by cutting-edge Blockchain technology during this election cycle. Stocks like Coinbase (NASDAQ: COIN), a leading crypto exchange as well as the biggest corporate holder of BTC, MicroStrategy (NASDAQ: MSTR), have already surged about 10% in pre-market trading today and are poised for further growth as the sector braces for friendlier regulatory mandates.
Keep An Eye On Energy Stocks
The oil and gas industry is among the top industries that heavily funded Trump's 2024 Presidential campaign. The sector wasn't aligned with former US President Joe Biden's policies to promote electric vehicles, impose fees on methane emissions, and implement restrictions on liquefied natural gas exports and the selling of new drilling rights in the Gulf of Mexico. Trump will likely undo these policies as he promised to "drill, baby, drill" from day one of his .
Sam Stovall of CFRA Research opined that the supply/demand balance could become complex as higher oil products will bring down oil prices, which could negatively impact upstream corporations like drillers, exploration, and oil production firms. However, he thinks the scenario could favourably impact downstream companies, such as refiners like Valero Energy (NYSE: VLO) and Kinder Morgan (NYSE: KMI), a natural gas transportation leader.
China Meme Stock Implying "Trump Wins Big" Soars
Halfway around the world in China, shares of Wisesoft Co., a software and equipment manufacturer, whose Mandarin name, "Chuan Da Zhi Sheng", implies a Trump victory, surged by double-digits as the US election results unfolded today. Interestingly, the stock also rallied when the billionaire won the 2016 election. Meanwhile, shares of Zhejiang Haers Vacuum Container Co, whose Chinese name shares similarities to "Harris", tanked by over 8% during the same period.
"With Trump's potential win, there could be a risk-on wave" for related meme stocks, said Global X ETFs' Billy Leung. "While they're worth watching, the real focus should be on established sectors like tech and finance, which stand to benefit more sustainably from policy shifts tied to a Trump administration."
Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.
