ASX stocks to watch during the US presidential election

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Impact of the US presidential election on ASX stocks

The United States (US) presidential election influences not only the domestic economy but also the global financial markets, with the Australian Securities Exchange (ASX) being significantly affected. Changes in the US administration or policy direction can lead to market volatility, particularly in sectors with strong trade or geopolitical ties to the US.

Investors should keep an eye on policy changes that could affect industries like mining, energy, technology, and healthcare, as shifts in international trade agreements or defence spending could ripple across ASX-listed companies. Additionally, a key factor to consider is tariffs. Trump has indicated that he may increase tariffs across the board, with those on China potentially as high as 60%. This could trigger a trade war, which would likely hinder global growth, negatively impacting commodity and resource stocks in particular.

Forex market reactions to political uncertainty

The forex market is also highly susceptible to political uncertainty, as currency values fluctuate based on perceived economic stability, trade relationships, and fiscal policies. For instance, if a candidate proposes policies that might weaken the US dollar, it could result in broader currency shifts affecting the Australian dollar, among others. Learn more about how the election may impact the forex market here.

ASX sectors and stocks to watch during the 2024 election

Certain ASX sectors are more sensitive to the outcome of the US election due to their direct exposure to American markets or policies. Here’s a breakdown of the industries that could see movement during the 2024 US election.

The mining and energy sector

If Donald Trump regains office, any policies promoting domestic energy production could lead to a surge in demand for crude oil and ​natural gas. However, a Kamala Harris administration could conceivably push for stronger environmental regulations and a shift towards renewable energy, which may challenge traditional energy sectors while benefiting renewable energy initiatives. However, if Trump enacts significant tariffs on China or other trading partners, it could slow global growth, negatively affecting resource demand and hurting stocks in this sector.

• Woodside Energy Group (ASX: WDS)

Woodside, one of Australia’s largest oil and gas producers, could benefit from a Trump administration that boosts demand for traditional energy and prioritises domestic production. In contrast, a Harris administration would likely emphasise renewable energy and stricter environmental regulations, putting pressure on fossil fuel-dependent companies like this

• Santos Ltd (ASX: STO)

Santos is a key player in natural gas and oil production, focusing on liquefied natural gas (LNG) extraction and export. A Trump administration could benefit Santos through policies favouring fossil fuel production and exports. In contrast, a Harris administration would likely push for cleaner energy and stricter emissions standards, which could pose challenges for Santos unless it shifts towards more sustainable energy solutions

• BHP Group (ASX: BHP)

BHP is a global mining giant with diverse interests in oil, gas, and metals essential for renewable energy. A Trump presidency might benefit BHP’s energy division – particularly its oil and gas operations – if domestic production becomes a priority under his administration. Meanwhile, Harris could also support BHP’s focus on minerals like copper and nickel, which are vital for renewable energy infrastructure, including electric vehicles and battery storage. However, BHP’s exposure to the Chinese market means it could be negatively impacted if Trump implements high tariffs on China, potentially hurting demand for commodities.

The defence sector

Defence stocks could be impacted by shifts in US defence spending, particularly in a geopolitical climate where military investments could change depending on the election winner. While a Harris administration may not ramp up defence spending to the same extent as Trump, ongoing tensions and international commitments could still support hefty defence budgets.

• Austal Ltd (ASX: ASB)

Austal is a shipbuilder of naval vessels for the US Navy. A Trump administration would likely favour increased military spending, potentially boosting Austal’s contracts. A Harris administration may focus more on technology and cybersecurity over traditional shipbuilding – which could mean slower growth for Austal’s operations but steady demand given ongoing Indo-Pacific tensions

• Electro Optic Systems (ASX: EOS)

EOS is a defence technology company specialising in space surveillance, satellite communications, and remote weapons systems. A Trump administration could boost EOS through increased defence spending, leading to more orders for physical defence technologies. Conversely, a Harris administration might focus on satellite and space systems, aligning with EOS’s strengths in the emerging space technology sector

• Codan Ltd (ASX: CDA)

Codan produces communications technology and metal detection equipment with applications in defence and humanitarian efforts. A Trump administration could sustain demand for Codan’s military communication systems, while Harris might emphasise high-tech and cyber-defence spending – potentially benefiting Codan as the US military increasingly relies on sophisticated technologies.

The technology sector

ASX-listed tech firms exposed to the US market could feel the impact of regulatory policies or international trade changes. A Harris administration will likely favour tighter tech regulations, particularly regarding data privacy, antitrust issues, and cybersecurity, while Trump will likely support deregulation and business-friendly policies. However, increased tariffs under Trump could hurt tech companies reliant on global supply chains, particularly if they source components from China.

• Xero Ltd (ASX: XRO)

Xero is a cloud-based accounting software company serving small businesses globally, with a notable presence in the US. A Trump administration could benefit Xero through tax reforms and deregulation aimed at supporting small businesses. On the other hand, a Harris administration might prioritise data privacy regulations, potentially increasing its compliance costs – although demand for cloud-based solutions would likely remain strong

• Altium Ltd (ASX: ALU)

Altium provides software for electronic design automation, serving engineers and designers of printed circuit boards. A Trump administration could benefit Altium through favourable trade and tax policies, especially if tariffs on electronic components are reduced. Meanwhile, a Harris administration might impose stricter tech regulations, but increased investment in tech infrastructure and research could boost demand for Altium’s software in electronics and semiconductors. However, Altium could face cost pressures under Trump if tariffs on China drive up the price of imported electronic components used in their designs

• Afterpay (ASX: APT)

Afterpay is a leader in the ‘buy now, pay later’ sector, enabling consumers to make purchases in instalments. A Trump administration could benefit Afterpay by maintaining light fintech regulation, allowing for easier growth. In contrast, a Harris administration might introduce stricter consumer protection regulations, potentially affecting the ‘buy now, pay later’ model and increasing operational costs or limiting expansion in the US market.

The healthcare sector

US healthcare policies, particularly around drug pricing and medical regulations, could have global consequences. A Harris administration could focus on expanding healthcare access and lowering drug prices, which could affect pharmaceutical companies’ margins but also expand the market for medical devices and therapies. A Trump administration is more likely to support free-market healthcare solutions.

• CSL Ltd (ASX: CSL)

CSL is a global biotechnology leader in blood plasma products and vaccines. A Trump administration would likely support free-market healthcare policies, enabling CSL to maintain higher prices for its specialised treatments. In contrast, a Harris administration might implement drug price reforms and expand healthcare coverage, potentially squeezing margins. However, CSL could benefit from a broader patient base due to increased access to healthcare

• Cochlear Ltd (ASX: COH)

Cochlear manufactures hearing implants and is a prominent player in the global medical device market. A Trump victory could allow Cochlear to benefit from a free-market approach, enabling premium pricing for its devices. In contrast, a Harris administration might expand healthcare coverage, increasing access to Cochlear’s products and potentially driving higher sales volume, even amid price pressures from regulatory reforms

• ResMed Inc (ASX: RMD)

ResMed is a respiratory care company that provides devices for treating sleep apnea and other respiratory conditions. Under Trump’s free-market policies, ResMed could maintain healthy margins, while a Harris administration might expand healthcare access and increase demand for ResMed’s products in the US as more patients gain coverage for respiratory treatments.