Donald Trump’s victory in the US presidential election reverberated across global stock markets on Wednesday, as investors raced to back the winners and sell the expected losers from his win.
Winners
Tesla
Shares in Tesla, whose chief executive Elon Musk became one of Trump’s most vociferous backers, surged as much as 13 per cent at the start of trading in New York.
Musk, who contributed more than $100mn to the pro-Republican America Pac, has been promised a role as head of a department of government efficiency in a second Trump administration.
Speaking at his Mar-a-Lago resort in Florida, Trump told supporters that “a star is born . . . Elon” and hailed the Tesla boss as a “super genius”.
Shares in Trump’s Truth Social media company climbed 33 per cent.
Banks
US bank stocks jumped as investors bet that interest rates would stay higher for longer under Trump and his administration would pursue a light-touch approach to regulation.
“This is an inflection point, a real game-changer,” said Mike Mayo, an analyst at Wells Fargo. “If I were to anticipate the mantra of the new administration, it’d be ‘resiliency with efficiency’ not just ‘resiliency at any cost’.”
Banks’ profits were fattened after the Federal Reserve raised interest rates to combat inflation, but that boost has faded as the central bank has started to cut borrowing costs.
JPMorgan, Bank of America, Citigroup were all up about 7 per cent in early trading. Shares in Goldman Sachs and Morgan Stanley advanced around 10 per cent, helped in part by the prospects that tax cuts would add momentum to a revival in dealmaking.
Manish Kabra, head of US equity strategy at Société Générale, said the prospect of a “red sweep” in which the Republicans took control of the White House and the two houses of Congress would also deliver broader benefits to companies whose fortunes are tied to the US economy.
“Buy US cyclicality: that means regional banks, private equity, private credit, oil stocks and classic reshoring beneficiaries like industrials,” Kabra said.
Private equity
Blackstone Group, KKR and Apollo Global climbed as investors anticipated they would be winners from any pick-up in dealmaking, sending shares in the firms up more than 4 per cent.
A slowdown in mergers and acquisitions has been a drag on profits for the buyout industry, hitting lucrative performance fees and making it harder for firms to sell their portfolio companies.
Expectations that a Trump administration would introduce a more lenient regulatory regime may also help the industry in its push to sell their funds to individual investors.
Defence
A Trump presidency is expected to be accompanied by higher defence spending, particularly among European countries that came under fire in his first term for failing to meet their Nato commitments
Shares in Lockheed Martin and Northrop Grumman both rose more than 1 per cent.
In Europe, the Stoxx Europe aerospace and defence index jumped 3 per cent to a record high, with Trump’s return seen as a boon for the region’s defence industry, given his calls on Nato members to spend more than 2 per cent of their GDP on defence.
“A more isolationist US” would almost certainly lift European defence spending and be a boost for the continent’s defence groups, said Sam Burgess, equities analyst at Citi.
BAE Systems, the UK’s biggest defence company, was up 4.3 per cent and Rolls-Royce gained more than 3.4 per cent. In Frankfurt, shares in Hensoldt rose more than 3 per cent while in Milan shares of Leonardo, one of Italy’s largest defence groups, were up 3.5 per cent.
Oil and gas companies
Trump courted oil companies during his campaign, vowing to rip up much of President Joe Biden’s environmental and climate agenda and imploring the industry to “drill, baby, drill”.
ExxonMobil, the biggest oil major, and rival Chevron were both up 2.5 per cent despite a stronger dollar hurting the oil prices.
Losers
Renewables
By contrast, renewable energy companies in Europe slumped amid fears that Trump could abolish the tax breaks and subsidies provided by Biden’s administration.
Denmark’s Ørsted, the world’s largest offshore wind farm developer, weakened as much as 14 per cent while Danish turbine manufacturer Vestas was down 10 per cent.
The S&P Global Clean Energy index, which tracks the world’s largest clean energy companies, was down almost 3 per cent.
Industry executives had been braced for a Trump victory, with Sean McGarvey, president of North America’s Building Trade Unions, telling a conference last week that a Trump victory would be “terrible” for the nascent US offshore wind industry.
Joe Biden’s administration turbocharged offshore wind deployment and set a target of 30GW of offshore wind by 2030. Trump has vowed to stop projects on “day one” of the new administration.
Tariff-exposed sectors
The prospect of Trump imposing new tariffs hit shares of European carmakers. Trump has said he will introduce steep levies on imports, with a plan to impose tariffs for goods from Europe at 20 per cent for Europe and 60 per cent for China.
The broad-based Stoxx 600 autos and parts index fell 2 per cent, with the threat of tariffs on imported cars, including from Mexico and the EU, weighing on German groups such as BMW and Volkswagen, which were down as much as 6 and 5 per cent, respectively.
The world’s biggest shipping companies were also under pressure, with Denmark’s AP Møller-Maersk down almost 8 per cent and Germany’s Hapag-Lloyd off as much as 6 per cent.
The sell-off was being driven by fears that a full-blown trade war between the US and China would reduce demand for shipping, said Petter Haugen, an analyst with ABG Sundal Collier.
Additional reporting by Mari Novik, Sylvia Pfeifer and Rachel Millard in London and Antoine Gara in New York
