Forecasted Stock Market Performances Based on the Outcome of the US Election
In the second term of President Donald Trump, large-cap US corporations are expected to reap significant advantages, primarily from tax cuts, market liberalization, and tariff policies. These policies, if implemented, could boost the economy and drive growth in specific sectors.
According to Holger Schmieding, chief analyst at Berenberg Bank, Trump's planned measures could provide a temporary "boost" for the US economy. One of the key drivers of this boost is the proposed extension of the 2017 income tax cuts and deregulation measures, which could significantly benefit the US economy.
The S&P 500 has already risen nearly 70% during Trump's first term as US President, and his proposed tax cuts could potentially increase the profits of S&P 500 index stocks by up to 20% next year.
The industrial and manufacturing sector is expected to benefit greatly from lower corporate taxes, 100% bonus depreciation, and tariff protection. Companies such as Caterpillar, 3M, and Deere could see factory expansions and capital investments as a result.
Technology and R&D-heavy firms could also benefit from immediate deduction for R&D expenses, incentivizing innovation and capital spending. Apple, Microsoft, and Nvidia are among the companies that could potentially see growth in this sector.
The materials and metals sector, particularly steel and aluminum producers, could benefit from tariffs on imported steel and aluminum, protecting domestic producers. Steel Dynamics and Nucor are examples of companies that could see a positive impact.
Financials could also benefit from lower taxes, improving corporate profits and increasing lending and investment capacity. JPMorgan Chase and Goldman Sachs are among the financial institutions that could see growth.
However, it's important to note that the longer Trump's presidency lasts, the more potential negative points could weigh in, as warned by Union Investment. Trump has also proposed deregulating markets, reducing regulations for oil and gas fracking, and easing bank lending, which could have mixed effects on the economy.
In summary, large-cap US corporations with significant investment and R&D activities and those in industries protected by tariffs or favored by market liberalization and tax breaks are poised to benefit. Industrial firms and tech companies that invest heavily in research and capital expenditure appear to be primary beneficiaries under the renewed Trump tax and trade framework.
Investing in the stock-market could yield high returns for large-cap US corporations due to anticipated tax cuts, market liberalization, and tariff policies. Finance institutions like JPMorgan Chase and Goldman Sachs might also benefit, as these policies could increase corporate profits and investment capacity.
