Harris vs Trump: Just days ahead of the US Presidential Election results on November 5, 2024, investors are trying to gauge how stock markets worldwide will react as polls and betting platforms point to a tight race between Vice President Kamala Harris and former President Donald Trump.
According to a Reuters/Ipsos poll published on Tuesday, Harris' lead over the Republican has dwindled to a single percentage point in the final stretch of the presidential contest. A majority of a dozen analysts that Reuters spoke to expect a Trump return to boost equity markets, with some favouring a split government.
Crypto stocks and small-caps have gained in the lead-up to the election. Bel Air Investment Advisors Chairman Todd Morgan told Reuters that if former President Donald Trump wins, his pledge to reduce corporate taxes and decrease stringent regulations could boost stock markets in the short term.
On the other hand, Donald Trump has promised to double down on trade tariffs, especially against China, and "rescind all unspent funds" under a signature Biden-Harris climate law that includes hundreds of billions of dollars in subsidies for electric vehicles, solar and other clean energy technologies. US Economists believe a divided Congress may be the best election outcome, as it limits what the president can accomplish and spend.
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According to news agency Reuters, here's the complete list of stocks and sectors that could move on the US Presidential Election Results:
Homebuilders: Harris' pledge to build more homes and reduce costs for renters and home buyers largely through tax incentives, coupled with a benign interest-rate environment, could boost homebuilders D.R. Horton, KB Home, Lennar, PulteGroup, Zillow Group and Toll Brothers.
Healthcare: The sector has been a key focus for the Harris campaign. Harris has pledged to cut healthcare costs by implementing caps on prescription drug prices, such as limiting insulin prices to $35. This could weigh on profit margins for pharmaceutical giants such as Eli Lilly, Merck, and Pfizer. Healthcare insurers like Humana and UnitedHealth Group likely benefit from expanded coverage under a Harris presidency.
Corporate Taxes: Harris' proposal to tax corporations and the wealthy includes a 28 per cent corporate tax rate, which could help the US deficit. According to Stock Analysis, Microsoft, Apple, and Alphabet were the three firms shouldering the highest income taxes over the past 12 months, collectively amounting to $67.73 billion. Analysts say market reaction could be temporarily negative due to higher corporate tax rates in case of a blue wave.
Renewable Stocks: According to Capital.com's Hathorn, green energy is poised to thrive under Harris' Presidency, with the potential for increased incentives and supportive policies, as well as regulations on big oil firms. Harris will aim to significantly reduce pollution by 2035, aligning with the Paris Agreement — a climate pact Trump has vowed to withdraw. Major US renewable energy firms, such as NextEra Energy, and hydrogen producers, including Plug Power and Bloom Energy, could also benefit.
Banks: A Trump win or Republican sweep could lift Wall Street banks such as JPMorgan Chase, Bank of America and Wells Fargo on improved domestic investment, looser regulations, domestic job additions and tax cuts, Bank of America analysts said. However, concerns around a wider trade deficit and tariffs are viewed as negative for the sector. M&A beneficiaries include Goldman Sachs, Morgan Stanley, Lazard and Evercore amid a more lenient approach to antitrust regulation enforcement.
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Crypto: A more "receptive" regulatory approach to digital assets under a Trump win could benefit crypto stocks, according to TD Cowen analysts, who highlighted the likelihood of the former president naming a pro-crypto SEC chair. MicroStrategy, Riot Platforms, MARA Holdings, Hut 8, and Bit Digital climbed between 3.4 per cent and 45 per cent in October.
Energy: Morgan Stanley analysts believe a Trump presidency could prioritize reducing the regulatory burden on domestic oil and gas production while considering the possibility of more restrictive trade policies. Trump's support for fossil fuel industries could benefit oil and gas stocks, as he would likely pursue policies that favour domestic energy production. Trump could leverage authority to rapidly increase production levels, benefiting exploration companies such as Chevron, Exxon Mobil, and ConocoPhillips.
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He could also reverse the Biden administration's pause on permitting new LNG export projects, likely benefiting Baker Hughes and Chart Industries. However, Trump's proposed 60 per cent tariff on imports from China could hit LNG exporters like Cheniere Energy and New Fortress Energy in case of any retaliatory actions.
Trump-Related Stocks: Trump Media & Technology Group, in which Trump owns a majority stake, software firm Phunware and video-sharing platform Rumble stand to gain further if he wins. Phunware and Trump Media & Technology doubled in October after a sluggish performance in recent months.
Prison Operators: Geo Group and CoreCivic 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 centres.
Carriers: Wells Fargo analysts said the proposed tariff on Chinese imports under a Trump term could hurt demand for parcel carriers FedEx and United Parcel Service, as well as forwarder C.H. Robinson Worldwide, which have substantial exposure to China.
Small-cap stocks: US-focused companies could benefit from business incentives and tariffs favouring domestic production. The small-cap Russell 2000 index rose nearly nine per cent in 2024.
