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

Phillip Nova高级投资分析师林知霖先生

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 此处, 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%) 和 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.

金子： 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%

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