Global financial markets are increasingly anticipating the possibility of former President Donald Trump securing a second term in the White House. This shift in sentiment was spurred by Trump’s strong performance against President Joe Biden in a debate and surviving an assassination attempt.
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The “Trump Trade” appears to be gaining momentum as investors prepare for the potential economic and market impacts of Trump returning as the 47th President of the United States.
What is the Trump Trade and its Market Impact?
The Trump Trade refers to market behaviors and investment strategies responding to the prospect of a second Trump administration. Known for his pro-business stance, Trump signed the Tax Cuts and Jobs Act (TCJA) in 2017, which reduced the federal corporate income tax rate from 35% to 21%. This law enabled at least 87 companies to pay effective tax rates in the single digits or less, and 23 firms paid zero federal income tax between 2018 and 2022, according to the Institute on Taxation and Economic Policy.
In a June meeting with about 100 business leaders, including JPMorgan Chase CEO Jamie Dimon and Apple chief Tim Cook, Trump promised further corporate tax cuts to 20%. He also vowed to make the 2017 tax cuts permanent and renew cuts for individuals and small businesses.
A second Trump term would likely bring deregulation and higher tariffs on foreign imports. After Biden increased tariffs on Chinese electric vehicles, Trump suggested similar measures for other products.
Early in his presidency, Trump reversed several consumer and labor protection bills, including the Fair Pay and Safe Workplaces Act, and rescinded regulations affecting various sectors, including food safety. More than 100 environmental regulations were rolled back during his first term, reported by The New York Times.
Beneficiaries of a Second Trump Presidency
Healthcare, banking, cryptocurrency, and oil sectors are expected to benefit from a second Trump presidency.
Trump has recently become a strong supporter of Bitcoin, accepting campaign donations in various cryptocurrencies. He plans to speak at the Bitcoin Conference in Nashville later this month and supports mining Bitcoin in the U.S.
The oil industry, which backed Trump in his 2020 and 2024 campaigns, stands to gain if Trump wins again. In May, Trump offered to undo Biden’s environmental and electric vehicle policies in exchange for $1 billion in campaign contributions.
Goldman Sachs has identified 34 stocks that could outperform under a Trump presidency, including telecommunications companies like Charter Communications and T-Mobile, retailers like Target and Lowe’s, and banks like Wells Fargo.
Tesla also stands to benefit despite Trump’s critical stance on electric vehicles. CEO Elon Musk endorsed Trump following the assassination attempt, and Musk’s support has been evident in recent months. Dan Ives, a Wedbush Securities analyst, views a Trump presidency as favorable for Tesla but not for the broader EV market.
Trump’s social media company, Trump Media and Technology Group, which owns Truth Social, could see significant gains, often rising and falling based on news related to Trump.
Potential Losers
The biggest losers would likely be companies focusing on clean energy, such as solar and wind, and those heavily reliant on foreign trade.
Trump has criticized clean energy and Biden’s Inflation Reduction Act, which offers tax incentives for solar panel installation and EV purchases. If Trump repeals these incentives, the solar and EV sectors could suffer.
Invesco Solar ETF and SolarEdge Technologies stocks faced losses due to the perceived increased likelihood of a Trump victory. SolarEdge announced a second round of layoffs this year due to market downturns, affecting other solar stocks like SunPower, First Solar, and SunRun.
Shares of Vestas Wind Systems and Ørsted A/S, both Danish wind power companies, also declined. Trump has pledged to halt offshore wind projects and often criticizes wind energy with unfounded claims.
— Vinamrata Chaturvedi and Rocio Fabbro contributed to this article.