As the U.S. presidential election results are announced on Tuesday, analysts predict a stronger stock market rally if former President Donald Trump wins compared to a victory by Vice President Kamala Harris. With Trump’s chances improving, the Trump Trade (investments in assets benefiting from Trump’s policies) appears to be gaining traction in U.S. markets.
On Sunday, the Nikkei reported a survey of 76 market experts from 58 companies regarding their outlook for U.S. stocks from late September through year-end. The majority believed that U.S. stocks would trend upward regardless of who wins.
However, the magnitude of the expected gains differs. The Nikkei survey found that over half of respondents anticipate a 5-10% rise in the S&P 500 index (to 6050-6338) if Trump wins. Notably, 20% forecast gains exceeding 10% (above 6448).
Many analysts see Trump’s policies as favorable for the stock market, such as permanent personal income tax cuts, corporate tax reductions, and deregulation across sectors. 38 respondents identified the energy sector, in particular, as likely to see stock price increases under a Trump presidency.
Accordingly, ExxonMobil, Halliburton, and Peabody Energy, among other coal and oil extraction companies, were identified as prominent beneficiaries. Many experts are optimistic about the financial sector, drawing on Trump’s first-term policies to roll back regulations on the financial industry, which had been tightened following the 2008 Lehman Shock.
The capital goods, services, and materials sectors were also highlighted as promising, with expectations of increased factory construction and demand for construction machinery driven by Trump’s manufacturing revival policies. However, there are concerns that Trump’s advocacy of tariff hikes could exert downward pressure on stock prices.
This concern stems from the potential for tariffs to drive up consumer prices and spark inflation while protecting domestic industries. The combination of tax cuts and increased government spending could lead to fiscal deterioration, potentially pushing interest rates higher and negatively impacting stocks.
In contrast, expectations for stock market gains under a Harris victory are more muted. The survey found that 40% of respondents predicted a 0-5% rise in the S&P 500, while over 20% forecasted a decline of 0-5%.
This subdued outlook is attributed to the risk of corporate tax hikes should Harris win, especially if the Democrats control the House and Senate. Another reason cited is that the market has already priced in the Trump Trade, which could result in a pullback.
Bitcoin, the asset most responsive to the Trump Trade, surged past $72,000 per unit, nearing its all-time high for the first time in six months amid Trump’s rising popularity. According to cryptocurrency information site CoinMarketCap, Bitcoin soared to $73,772 on October 29, approaching the record high of $73,800 reached on March 13.
Gold and the U.S. dollar, also considered part of the Trump Trade, have seen significant gains. Expectations of large-scale Treasury bond issuances fuel this trend to fund Trump’s proposed tax cuts and stimulus measures, which could drive up bond yields and strengthen the dollar.
Meanwhile, the South Korean stock market is also perceived to be influenced by the U.S. election. As of 9:23 a.m. on October 29, Doosan Enerbility shares on the Korea Exchange were trading at around $15, up 2.8% from the previous day.
Experts interpret the rise in Doosan Enerbility’s share price as driven by increasing expectations that Trump, who has pledged to expand nuclear power, could win the U.S. election. Consequently, interest in industries expected to benefit from Trump’s deregulatory policies—such as nuclear power, infrastructure, defense, banking, and energy—is expected to rise.
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