The US stock market is on the tenterhooks ahead of the crucial election on November 3. The markets are broadly expecting a Joe Biden victory but at the same time, financial market participants are also hedging against a Donald Trump win.
If Biden recaptures the White House for the Democrats, US financial markets could witness policy changes that will have long-term impact. If Trump holds on to power despite projections and predictions otherwise, the markets will certainly go through a short-term shake-up.
Worse still, market participants have the heebie jeebies as they are also bracing for a contested election. The national polls clearly place Biden ahead while the opinion surveys in key swing states tell a vastly different story. The Democrats believe they will get 270 electoral college votes on the election night, while Republicans are confident that the swing states will return surprise results that will help them stay in power.
President Trump has said in unequivocal terms that he will fight until the end and claim victory if he takes early lead. No matter who claims the election first, the day after could see rival teams filing a mountain of lawsuits in multiple locations.
However, despite all the uncertainties surrounding the 2020 US elections, there are some certainties too. There are some who will benefit under a Biden presidency and others who would thrive under Trump's continued stay in power. So, which stock market segment will boom if Biden wins, and which would soar if Trump retains the White House?
Reuters news agency has put together two separate baskets of stock groups that will benefit under each dispensation.
Companies in the alternative energy segment will see their stock rising if Biden wins. It is expected that a Biden administration will strongly push green energy. For example, in anticipation f Biden win, Invesco Solar ETF climbed about 40 percent from roughly mid September to mid October, the agency reports.
infra companies such as Vulcan Materials, Jacobs Engineering Group and Caterpillar could see a stock boom if Biden wins. Large scale infrastructure projects could be taken up under the Biden administration, the report notes.
Broadly there will be a rally in small cap shares if Biden wins as the Democrats are more likely to roll out stronger fiscal stimulus measures that will in turn bump up the fortunes of small players.
U.S.-listed shares of major cannabis producers have already surged in anticipation of a Biden victory. These companies will see further boost to their fortunes if the Biden-Harris ticket wins.
Which Stocks will Thrive if Trump Wins?
Banks: The banking sector would love it more under Trump than Biden, as the Democrats are likely to bring in tighter regulations for the sector. A second Trump term could see a continued 'light touch' on regulation and a push to reduce taxes," Ameriprise Financial has said, according to the report. According to JP Morgan, Bank of America, Wells Fargo and Citigroup are in the "Trump basket".
The fossil fuel industry has a friend in Trump. If he wins the industry will see a friendlier tax and regulatory environment, according to Allianz Global Investors.
The Big Tech will be "one of the biggest benefactors" of Trump's tax reform, according to Deutsche Bank International Private Bank. It also says that they will likely benefit from a softer stance on regulation and antitrust policies under a Trump regime.
Defense and Pharma
The defense and pharmaceutical sectors will get a fillip under the Trump administration. The Trump administration will continue to promote aerospace and defense, analysts say. A Biden victory, plus a Democrat majority in the Senate can send shock waves through the pharma industry as the Democrats could push through a tough regulatory regime, experts warn.