During election periods, financial markets are notoriously volatile and unpredictable as investors navigate potential policy changes and economic shifts.
The recent assassination attempt on Donald Trump has had a significant financial impact, with the U.S. markets demonstrating resilience, closing higher on Monday, July 15, 2024. The Dow Jones Industrial Average rose by 0.6%, reaching a new record high, driven by recent inflation data and Friday’s historic close above 40,000. Additionally, the S&P 500 gained 0.3%, while the Nasdaq Composite added 0.4%.
Looking ahead, the election is set to influence several key sectors, including financial, renewable energy, traditional fuels, and healthcare. Understanding these potential impacts can help investors better navigate their portfolios in the months ahead.
Financial Sector
Under a potential second Trump administration, UBS predicts a relaxation of capital and liquidity regulations. This regulatory easing is expected to benefit major banks like JPMorgan Chase, Bank of America, and Wells Fargo, and extend advantages to smaller lenders such as Discover Financial, KeyCorp, and Synchrony Financial.
Solar Stocks Outlook
Experts caution that Republican opposition to green initiatives, supported by Trump, could jeopardise $1 Trillion in low-carbon energy investments incentivised by the 2022 Inflation Reduction Act. Conversely, UBS expects a second Democratic administration to maintain these incentives, potentially benefiting solar manufacturers like First Solar, NextEra Energy, and Sunrun.
Clean Energy vs. Oil Companies
Under a Democratic administration, continued support for electrification and green hydrogen production could benefit companies like Eaton, Quanta Services, Tesla, and Air Products and Chemicals. Incentives would also favour manufacturers of energy-efficient products, such as Johnson Controls and Trane Technologies, and waste management firms with strong recycling infrastructure, like Waste Management and Republic Services.
Conversely, a Trump administration could stimulate the oil and natural gas sectors with increased investments, drilling activity, and higher natural gas exports, benefiting producers such as Exxon Mobil, Cheniere Energy, and ConocoPhillips.
Healthcare
Historically, healthcare stocks tend to underperform as investors anticipate reform. However, this year, they have kept pace with the broader market, returning 8.9% compared to the S&P 500 Index’s 10.6%.
Total healthcare expenditure is expected to rise under both administrations, focusing on reducing medical inflation. A Democratic win could benefit the sector the most, with healthcare spending projected to reach 16.9% of US GDP by 2028. As a result, big pharma companies including Eli Lilly & Co, Thermo-Fisher Scientific Inc., Amgen Inc., Merck & Co, and Johnson & Johnson should continue to grow.
