Which assets, sectors and companies would benefit in the event of a Trump or Harris victory?
31 OCT, 2024
The outcome of the U.S. presidential election could significantly influence market dynamics, with different asset classes, sectors, and companies poised to benefit depending on who takes office. A Trump victory is anticipated to bolster U.S. equities and small domestic stocks, with particular benefits for companies tied to American consumer spending. However, trade tensions and increased defense spending demands could weigh heavily on European exporters and NATO member states. In contrast, a Harris victory could favor large-cap and cyclical stocks, European companies, and renewable energy, although it may pressure traditional energy stocks and highly regulated sectors like banking. This article explores the specific winners and losers in each scenario, highlighting the potential sectoral shifts and market opportunities tied to these distinct policy paths.
Mirova analyses which sectors would benefit and which would be harmed in each of the possible scenarios following the US presidential election.
The impact of a Donald Trump victory
The latest polls suggest a Donald Trump victory, who would benefit from this election outcome?
Trump's victory would be favourable for:
- It would be slightly positive for US equities
- Small domestic stocks would outperform
- A Trump administration could have a more favourable impact on any company exposed to US discretionary consumption levels.
And it would be unfavourable for:
- Importers and non-US stocks selling in the US. Among others, European exporting companies, especially German OEMs.
- Cyclical stocks would likely struggle, given the pressures on global trade due to a Trump trade war.
- A Trump administration would also have a broadly unfavourable impact on European governments. We have calculated that European NATO member states would have to devote a total of at least €75 billion per year to defence budgets; this could trigger austerity measures to finance the aforementioned budgets and end up increasing the possibility of recession for the eurozone.
The impact of a Kamala Harris victory
Despite the latest polls favouring Trump, equality has been the dominant theme since Kamala Harris became the Democratic nominee, which sectors would benefit from her arrival to the White House?
A Harris victory would be favourable for:
- Large-cap and cyclical stocks.
- Non-US stocks and importers - the latter would be relieved by a rally.
- European companies. However, it would probably result in more strained relations with Russia, which in turn would weigh on consumer confidence in Europe.
- The renewable energy sector
And it would be unfavourable for:
- Initially, it would be slightly negative for equities. On this asset, we believe that the increase in corporate tax rates for US companies will not be a game changer in itself, and that equity markets are likely to quickly take this into account in their prices.
- Initially, traditional energy stocks, such as fossil fuels.
- Consumer stocks benefiting from the child tax credit and measures to support the consumption of middle and working class households.
- It would also be relatively negative for banks - due to increased regulation.
- And stocks with high share buybacks. The opposite would be true in case of a Trump victory.
