SHARES of Trump Media, Tesla and domestic-focused small-cap companies surged on Wednesday (Nov 6) as Donald Trump was elected US president for the second time, fuelling expectations of higher domestic growth.
Capping a remarkable comeback after four years, Trump’s victory in the swing state of Wisconsin pushed him over the threshold required to win the White House.
Tesla jumped 15 per cent as CEO Elon Musk has backed Trump throughout his electoral campaign. Trump has promised to make Musk head of a government efficiency commission.
Trump Media & Technology Group, in which the former president owns a majority stake, soared about 30 per cent. From their all-time lows hit in late September, they have nearly tripled in value. His stake was last valued at about US$5 billion.
Meanwhile, the S&P 500 and Dow futures hit an all-time high and futures tied to the small-cap Russell 2000 index surged 6.2 per cent on bets that US-focused companies would benefit from lower taxes and tariffs that favour domestic production.
“The market believes a Trump presidency will unleash animal spirits and give a boost to growth in the short-term through some relief on corporate taxes and deregulation,” said Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Trump’s Republican Party also secured the Senate and was making gains in the House of Representatives, potentially making it easier for the president to legislate his proposals and push through key appointments.
“If you look at historical playbook, a Republican sweep has been strong backdrop for the S&P 500 whereas a Republican presidency with a split Congress has given a more muted return,” Carrier said.
Wall Street lenders JPMorgan Chase, Bank of America and Wells Fargo, typically sensitive to US economic prospects, jumped between 7 per cent and 9 per cent.
Victory for Trump, who has positioned himself as pro-cryptocurrency, lifted Bitcoin to a record high. Crypto-linked stocks Coinbase, MicroStrategy, Riot Platforms, MARA Holdings jumped between 10 per cent and 13 per cent.
Private prison operators Geo Group and CoreCivic jumped 27 per cent and 23 per cent, respectively, as Trump’s promised crack down on illegal immigration could boost demand for detention centres.
Elsewhere, European defence stocks jumped against the backdrop of Trump earlier this year threatening US withdrawal from Nato while saying he would not defend allies that did not increase their defence budgets.
“A Trump presidency would add further impetus to accelerate European defence spending, as evidenced by his first term in 2017-2021,” Berenberg analysts said.
Autos, energy and China
While Tesla shares surged on Musk-Trump relations, other stocks of other electric automakers dipped as Trump has promised to consider ending a US$7,500 tax credit for EV purchases.
“Tesla straddles the two perfectly, with Elon Musk’s position within Trump’s administration only serving to further enhance optimism for a company that benefits from being both a growth/tech stock and US-based manufacturer,” said Joshua Mahoney, market analyst at Scope Markets.
Rivian Automotive dropped 5 per cent and Nikola slipped about 2 per cent. Shares of US automakers Ford and General Motors were up about 4 per cent each.
Oil majors Chevron and ExxonMobil firmed about 3 per cent each, while US renewable energy firms such as NextEra Energy and First Solar plunged 8 per cent and 12 per cent, respectively.
Trump’s presidential campaign has laid out an energy policy platform centreed around maximising US fuel and power output, in part by dismantling the current administration’s centrepiece efforts to fight climate change.
Fears of escalation in Sino-US tensions pressured US-listed China shares with iShares MSCI China ETF dropping 2.4 per cent.
Import duties, including a 10 per cent universal tariff on imports from all foreign countries and a 60 per cent tariff on imports from China, are a key plank of Trump’s policies and likely to have the biggest global impact. REUTERS
