Stocks and markets to watch when Donald Trump is inaugurated
Donald Trump’s second inauguration is set for 20 January 2025. Which markets are most likely to respond to a new President?
Republican Donald Trump is returning to the White House on 20 January 2025. In his second term, the new President’s party controls both the House of Representatives and the Senate, and has also installed a majority of the judges in the Supreme Court.
All being equal, Trump will now wield significantly more power than in his first term where several of the other branches of government were under the control of the Democrats.
Of course, the US remains the world’s largest economy, and its political leader is going to affect almost every market to some degree. But here’s the top segments to watch in anticipation:
Elon Musk’s Portfolio
Serial entrepreneur Elon Musk is arguably a clear winner of the recent US election. Tesla shares have rocketed — Musk was one of Trump’s biggest financial backers during his campaign, and the pair now appear to be personally close. Musk will also lead the new Department of Government Efficiency (DOGE), which may see the billionaire wield significant political power.
Aside from Tesla, it’s worth keeping an eye on SpaceX and subsidiary Starlink — the former is at a record valuation of $350 billion — and analysts consider that an IPO may be in the offing in 2025. This would likely be one of the most popular stock market launches ever.
Cryptocurrency Stocks
Coinbase could be a winner of the new administration, as could CleanSpark, Riot Platforms and Marathon Digital. But all eyes currently appear to be on MicroStrategy.
MicroStrategy’s strategy appears to include borrowing money to buy Bitcoin, issuing convertible notes, a type of debt instrument that can be converted into company stock, to raise funds for Bitcoin acquisitions.
While this is arguably high-risk, what is clear is that the new administration is far more pro-cryptocurrency than the former. And with SEC Chair and crypto-sceptic Gary Gensler leaving his post on Trump’s first day in charge, this new phase seems likely to continue.
However, it’s worth noting that with Bitcoin surging above $100,000 in the wake of Trump’s victory, a pullback could see MicroStrategy shares disproportionately fall. On the other hand, news that Trump is considering a strategic Bitcoin reserve could buoy the alternative investment.
Gold/USD
In the immediate aftermath of the election, Gold came off its record highs, but has since recovered back to $2,650/oz.
Should Trump go for the trifecta of tariffs, higher spending and tax cuts, you may see interest rates stay higher for longer, creating a stronger Dollar and weaker gold. Conversely, tariffs introduce yet more uncertainty to the global economy, which could drive more investors to the precious metal. It’s also worth noting that should the US start-up its proposed strategic Bitcoin reserve, this may also hit gold as a safe haven asset.
However, gold has not moved with textbook economics since the pandemic. Many analysts had considered that higher rates would reduce the gold price, and the metal has instead soared to record highs, perhaps due to wider concerns about the stability of US debt.
Oil and Gas
During his election campaign, Trump promised to ‘Drill, Baby Drill’ in order to get the economy roaring and keep inflation suppressed. While Exxon’s Upstream President Liam Mallon seems sceptical, Trump is expected allow more oil and gas drilling on federal lands, to execute on Scott Bessent's ‘3-3-3’ plan to increase US oil production by an addition 3 million barrels per day from the current record 13.3 million.
For perspective, the US is already the largest oil producer in the world. Increased supply may see oil prices fall, though significant uncertainty and open conflict in the Middle East, alongside OPEC cartel action, may keep any potential price falls in check.
Ukraine War
Trump has previously promised to end the Ukraine War on day one of power. While perhaps overly ambitious, the war appears to be largely in a stalemate and there are signs both sides are prepared to negotiate.
Of course, many commodities — and by extension the global economy — will be affected by a peace deal given the western sanctions placed on Russia but two specific stocks that may stand to benefit from peace include Ukraine-based iron ore producer Ferrexpo, and Bank of Georgia, which would likely benefit from better Russia-US relations.
Banks
Leading US financial institutions may gain an advantage from what is expected to be looser regulation and more beneficial tax policy after Trump’s victory. Indeed, shares in JP Morgan, Wells Fargo and Goldman Sachs among others all posted strong gains on results day.
Among a host of potential changes, some analysts consider that the controversial Basel III endgame capital framework, which has stalled for over a year, could be scrapped or watered down. In addition, new incoming rules related to long-term debt and liquidity requirements may also not come to fruition.
Prison and Firearms
Trump has appointed Tom Homan as ‘border czar,’ with the former acting ICE director planning a ‘necessary mass deportation operation.’
Regardless of your politics, this is going to require more detention spaces. GEO Group's Chairman advised in a recent conference call that he expects the government to fund between 70,000 and 100,000 beds in ICE detention centres, roughly double the current number. Fellow prison stock CoreCivic will also likely be positively affected.
Republicans are famously pro-gun, so analysts expect weaker regulation in this area for the next few years. Stocks including AMMO, Inc and Smith & Wesson Brands have already enjoyed some gains.
Trump Media & Technology Group
Trump’s ‘Truth Social’ social media app remains loss-making but is cannon fodder for meme stock traders — and will likely remain so over the next few years. Traders bought up the stock in the run-up the election and appear to be selling for now, which is unsurprising given the gains currently being made by the major tech stocks and cryptocurrency (despite the risks).
Having a social media addict like Trump have his name attached to a social media company during his Presidency can only spell volatility.
Defence and Health
Defence stocks may be volatile in the medium term. Global defence spending hit a record $2.4 trillion in 2023, but defence spending may be cut under Trump’s efficiency drive which could hit the major US stocks which rely on government contracts — including General Dynamics, Lockheed Martin and Northrop Grumman.
However, several analysts argue these concerns are overblown and consider that defence spending will remain high given the volatile state of the world.
On a similar note, healthcare insurers including UnitedHealth and Humana may both benefit from the widely expected potentially higher rates for private Medicare providers under the new government’s policies.
China
Sino-US relations have always been a little frosty, and yet trade between the two countries hit a record $575 billion in 2023, continuing a growing trend. While the US continues to restrict tech exports to the Communist country — and China fires back with export bans on key critical minerals — wavering Chinese economic growth may spell trouble over the medium term.
For near-term options, you may consider resource companies with access to ex-China sources of critical minerals, which may benefit from expedited government grant funding and favourable loans to increase or start-up production.
How to trade the markets as Trump takes power
- Research political events' impact on markets
- Open an account with IG
- Monitor political developments and market reactions
- Pick a market to invest in
- Implement risk management strategies
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