The Trump Effect: Impact to Stocks, Energy, Indices and Cryptocurrency

23 Jan 2025

By Danish Lim, Senior Investment Analyst for Phillip Nova

The stock market initially rallied after Trump’s election win, but gave back gains towards the end of 2024 as investors started to question the Fed rate cut trajectory amid the threat of inflation re-emerging due to tariff hikes. This coincided with a sharp steepening in the yield curve as investors priced-in shallower rate cuts (two 25bps cuts in 2025).

In the week prior to Trump’s inauguration, the macro backdrop turned supportive as US equities posted their first weekly gain of the new year, buoyed by cooler inflation data, upbeat bank earnings, and a recovery from short-term oversold conditions.

The Trump trade initially saw a relief rally during Trump’s inauguration, as he refrained from announcing new trade tariffs— a better outcome than most had feared. But this quickly reversed after Trump said he plans to enact tariffs as much as 25% on Mexico and Canada by Feb 1, and that his threat to impose 10% tariffs on China is still on the table.

As mentioned here, we favoured certain sectors & stocks leading up to the elections. We review how our picks have done since Election Day:

Trade Recommendations that Worked:

Tesla (+65.09% since Election Day): Tesla stands out as one of the biggest Trump trade winners as the EV maker is expected to benefit from Musk’s closeness with Trump and the removal of the $7,500 EV tax credits—which is expected to level the playing field for Tesla with other US EV makers like Lucid and Rivian.

Emerging US EV makers like Rivian (-13.03%) and Lucid (-10.70%) fell in the 2 sessions post-inauguration as they are more vulnerable to changes in government backing and infrastructure support for EVs.

Long Dollar: The DXY rallied 4.95% since Election Day up until Trump’s inauguration; but the Greenback is down by -0.95% since the inauguration due to Trump’s softer than expected stance on tariffs; although it did claw back losses following tariff threats on Mexico and Canada.

Bitcoin (+47.58% since the election): Benefitting from Trump’s pro-crypto stance, prices topped $100k in mid-December before dropping back below the $100k level towards year-end. Bitcoin then recouped losses and hit a new all-time high near $109k leading up to Trump’s inauguration and after the SEC formed a “Crypto Taskforce”.

Artificial Intelligence: AI related ETFs and stocks posted mild gains following the elections, before surging on soft US CPI data. They then received a boost from Trump’s $500b AI investment plan.

Since the elections: iShares Semiconductor ETF +6.45%, Global X Artificial Intelligence & Technology ETF +8.64%. Both soared over 2% post-inauguration.

Nvidia (+4.43%), Oracle (+6.75%), ARM-ADR (+15.93%), and Microsoft (+4.13%) all jumped after Trump announced the “Stargate” JV project which involves AI investments from OpenAI, Oracle and Softbank.

The JV shows a willingness of the new administration to work alongside large tech companies, potentially signalling an expansion of AI investments in the US.

Aerospace and Defense:

Since the election: SPDR S&P Aerospace & Defense ETF +14.25%; and +3.73% post-inauguration.

Stocks like Taser maker Axon Enterprise (+37.75% since Election).

Niche Plays:

Since election day: Private Prison Operators GEO Group +127.03% & CoreCivic +63.17%; Conservative video-sharing platform Rumble Inc +111.93%

Trade Recommendations that somewhat Worked:

Financials:

Banks were dragged down by expectations of a shallower rate cut cycle and higher yields towards the end of 2024, but eventually saw a rebound after US CPI came in lower than expected on 10 Jan. They were then supported by strong 4Q earnings from big US banks.

Since election day: iShares US Financials ETF +8.89%, SPDR S&P Regional Banking ETF +7.42%. Both are flat post-inauguration.

Reshoring and America First:

Since election day: First Trust RBA American Industrial Renaissance ETF +8.23%

Energy: Higher oil production from increased drilling on Federal land could result in excess supply and lower oil prices that may weigh on the sector.

Macro backdrop has been bearish—with weak global crude demand, rising stockpiles, Dollar strength, and easing of Middle East tensions all weighed on crude prices.

Since elections: Exxon fell by -7.17% while the Energy Select Sector SPDR Fund is up only 2.63%. Both are down over 2% post-inauguration.

But oil players focused on exploration & production are a bright spot— SPDR S&P Oil & Gas Exploration & Production is up +7.83% since election day. E&P player EQT Corp is also up +42.81% for that period.

Gold: Although Gold could benefit from increased safe haven flows due to Trump tariff threats, this has largely been offset by a rate cut cycle that could be shallower than expected, as well as a stronger Dollar that has weighed on the yellow metal.

Since the election: Gold is nearly flat, up by only +0.46%, although it is up +1.55% post-inauguration following tariff threats on Mexico, Canada, and China.

Trades that are yet to work:

Small caps (Russell 2000 +2.18% since Elections): Small caps were expected to be one of the biggest beneficiaries of Trump 2.0, buoyed by expectations that tax cuts and protectionist policies will help the group as they typically generate a majority of revenue domestically.

The Russell 2000 jumped 5.8% on the day after the election, but proceeded to erase its “Trump Bump”— dropping by -10.09% from 11 November to 10 January, as higher yields weighed on small caps that tend to have heavier debt loads.

The Russell 2000 posted 6 consecutive winning sessions since the release of US CPI, it gained 1.22% following the inauguration.

Healthcare: It was thought that Healthcare stocks could benefit from increased deregulation. But Trump’s appointment of Robert F. Kennedy Jr, a vaccine skeptic and critic of traditional healthcare services, as head of the Department of Health and Human Service has weighed on the sector.

Since elections: Vanguard healthcare ETF down by -3.25%, Drugmakers suffered the biggest losses, with AbbVie down -15.30%.

Trump Media & Technology Group: Viewed as a proxy to Trump’s chances of winning a 2nd term, the stock saw huge gains prior to the actual elections results.

Since elections: DJT is nearly flat at -0.97%. The company still operates a loss and it remains unclear how Trump being in the White House will benefit the media company. DJT Plunged 11% in the first trading day after inauguration.

Legacy Automakers: There was a line of thinking that a reining in of Biden-era EV policies and tax credits could benefit legacy automakers who could see an increase in non-EV sales.

Since elections: Ford -4.08%, Stellantis -5.07%, General Motors -1.53% as Trump’s tariffs are expected to increase overall car prices. This is because most legacy automakers outsource the manufacturing of auto parts and components to overseas countries such as Mexico.

Ford fell by -3.84% and GM dropped by -2.10% after Trump threatened tariffs on Mexico and China.

Retail: Companies that source a relatively big chunk of their goods from abroad have been dragged down by the threat of tariffs.

Since elections: Dollar General -12.61%, Hasbro -13.53%, Best Buy -8.64%

Phillip Nova 2.0 gives you the tools to stay ahead of election-driven market shifts and make informed trading decisions with ease.

Trade opportunities driven by The Trump Effect now!

If you’re already a customer, head to your Watchlist > +Add > click on the “President Trump 2.0” category to view our special curated list of products.

If you’re new to Phillip Nova, click here to open an account now!

Trade Stocks, ETFs, Forex & Futures on Phillip Nova

Features of trading on Phillip Nova

Gain Access to Over 20 Global Exchanges
Capture opportunities from over 200 global futures from over 20 global exchanges

Trade Opportunities in Global Stocks
Over 11,000 Stocks and ETFs across Singapore, China, Hong Kong, Malaysia and US markets.

Over 90 Technical Indicators
View live charts and trade with ease with over 90 technical indicators available in the Phillip Nova platform

Trade Multiple Assets on Phillip Nova
You can trade Stocks, ETFs, Forex and Futures on a single ledger with Phillip Nova

Free Phillip Nova Demo Account

Fast and Secure Online Account Opening

An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12^th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

Trade in both the bull and the bear markets
The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
Smaller barrier to entry
Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
No expiration date or risk of delivery
Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

More Market Trends

28 Jan 2025

The Trump Effect: Impact on Gold

Client Portal