Markets hate uncertainty, the old adage goes, so there will be some relief among investors that American voters have made a clear-cut decision.
Days or weeks of political and legal wrangling over the outcome of the US election would likely have proved hugely turbulent in financial markets – and destabilising for the global economy.
So while the return of Donald Trump to the White House will stir strong feelings for many, investors can start to plan for the coming years with at least some clarity.
Many Britons will be direct investors in the US, with the lucky ones owning shares in the tech giants such as Apple, Microsoft and Amazon.
Anyone with a private sector pension will have some assets in the US.
Leading up to polling day, the received wisdom was that a Donald Trump win would be better for equities and worse for bonds
The verdict on the markets was swift – stock markets soared alongside the dollar and bitcoin while US government bonds fell in value, pushing up yields or borrowing costs
The American market accounts for 60pc of global equities and every balanced portfolio will own some shares there.
Beyond that, the dollar anchors world trade and investment.
US treasury securities – IOUs issued by the American government – are the main investment held as reserves in the world’s central banks.
Of course, the US is not only the world’s largest economy, well clear of China, but is increasing its lead over Europe.
So what happens now?
The verdict on the markets was swift – stock markets soared alongside the dollar and bitcoin while US government bonds fell in value, pushing up yields or borrowing costs.
These are the so-called Trump trades in action.
Leading up to polling day, the received wisdom was that a Trump win would be better for equities and worse for bonds, whereas a Kamala Harris presidency would be the other way round.
The argument was that the Republicans will be more pro-business than the Democrats, and that the tax cuts they have promised will, in the short run at least, boost economic growth and corporate profits. The downside is likely to be higher inflation, leading to higher interest rates, and more government debt.
There are also implications for the global economy – including Britain – not least the threat of a global trade war if Trump carries out his pledge to ramp up tariffs on imports to the US.
‘Trump winning means tariffs which will adversely affect growth in Europe,’ is the stark warning from Nomura economist Andrzej Szczepaniak.
A trade war could see the growth rate in the UK halve as inflation and interest rates soar, according to the National Institute for Economic and Social Research (NIESR), a leading think-tank.
The forecast is based on the impact of Trump imposing tariffs of 60pc on Chinese goods and 10pc on goods from the rest of the world.
That would result in a 0.7 percentage point hit to UK gross domestic product (GDP) growth in the first year. GDP growth for 2025 is currently forecast at 1.2pc by the NIESR.
‘Because the UK is a small, open economy, the UK is one of the most affected by increased trade tariffs,’ warns Ahmet Kaya, principal economist at the NIESR.
Lower growth would make life even harder for Chancellor Rachel Reeves as she struggles to make her Budget numbers add up.
She has already imposed £40bn of tax hikes and outlined plans for billions of extra borrowing to fund her spending pledges.
Further strain on the public finances would likely lead to more tax hikes and borrowing, particularly at a time when European countries are under pressure from Trump to increase defence spending.
So what should investors do?
History suggests you should put political allegiances to one side and stay invested in the stock market – no matter who is in the White House.
And analysts reckon there are plenty of options – as well as risks – for those wishing to cash in on a Trump victory.
But in a note of caution, Justin Onuekwusi, chief investment officer at St James’s Place, says: ‘Elections, particularly ones as contentious as this, have a way of stirring up short-term market volatility.
‘However, history has shown it is unwise to make significant adjustments based on political events. Market volatility is often based on speculation and not any change to fundamentals.
‘While elections may create temporary volatility, we believe remaining disciplined and building a diversified portfolio is the most effective means of delivering long-term value. It is important to remember the main risk from market events is the poor decisions we can make when they occur, rather than the ramifications of the events themselves.’
With that in mind, here are ten investments experts believe are worth looking at, though each carry risks.
Exxon Mobil
Trump has long been seen as a friend of big oil and the ‘America First’ mantra of his upcoming spell in the White House is likely to place an emphasis on energy independence, according to Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Any move to favour fossil fuels and deregulate the oil and gas industry should benefit Exxon Mobil, she says.
‘Trump’s win is likely to bring Exxon regulatory relief, including relaxed environmental restrictions and lower corporate taxes, both of which could enhance profitability and support increased domestic production,’ says Streeter.
But she notes: ‘Refining margins have seen some softness of late and with global demand looking uncertain, weaker oil prices could still weigh on the stock.’
Any move to favour fossil fuels and deregulate the oil and gas industry should benefit Exxon Mobil
JP Morgan Chase
Streeter also believes the financial sector will benefit from Trump’s return to the Oval Office, with JP Morgan Chase, America’s largest bank, her pick of the bunch.
‘He is expected to bring a continued focus on deregulation and lower taxes,’ she explains. ‘A lighter regulatory touch might reduce compliance costs and stimulate capital markets through favourable policies.’
Rolls-Royce
The value of Rolls-Royce hit £50billion for the first time ever after Donald Trump declared victory in the US presidential election.
Shares in Rolls rose as much as 6pc to 592p each – taking gains since ‘Turbo’ Tufan Erginbilgic took over as chief executive at the start of last year to over 500pc – meaning they have risen more than six-fold.
That gave the British engineering giant, which powers the Royal Navy’s submarine fleet and makes engines for fighter jets as well as commercial airliners, a value of £50.3billion.
It was worth £7.9billion when Erginbilgic took the helm.
The return of Trump to the White House is seen as bullish for European defence stocks given his warnings to scale back US military support in the region and force Nato members to spend 2pc or more of their GDP on defence.
Of the 18 City analysts currently rating the stock, 13 say ‘buy’ while just one says ‘sell’. The remaining four tell those who already own shares to hold on to them.
Rachel Reeves and Sir Keir Starmer visit a Rolls-Royce factory in Derby earlier this year
Ashtead
Among the biggest risers on the stock market in London today was Ashtead, which dates back to 1947 and hires out equipment from barriers and fencing to excavators and forklifts under the Sunbelt Rentals brand.
The company floated in London in 1986 and is a major player in the FTSE 100 index but now does most of its business in the US where, among other things, it provides equipment for film-making and TV production.
Analysts at Peel Hunt believe 91pc of its profits will come from America in 2025 and will benefit from ‘the proposed cuts to corporation tax that could stimulate slightly higher levels of private sector investment’.
Dan Coatsworth, an analyst at AJ Bell, agrees, describing Ashtead as ‘a perfect match for Trump’s vision of blue-collar workers earning a steady salary in America’.
He adds: ‘Its longer-term prospects should improve under Trump and near-term there is a chance it could say that hurricane clean-up work has provided a welcome boost to earnings.’
Sunbelt Rentals in the US hires out equipment from barriers and fencing to excavators and forklifts
Ferrexpo
Also on the rise in London was Ferrexpo, which operates three iron ore mines and an iron ore pellet production plant in Ukraine and stands to benefit if Trump can help end the war with Russia.
Neil Wilson, chief market analyst at Finalto, says the jump in the shares – up as much as 40pc to 87p – is a ‘Ukraine peace play’ while analysts at Peel Hunt describe Ferrexpo, the world’s third largest exporter of iron ore pellets, as ‘the Trump trade of the moment’.
‘Given its Ukrainian mine and processing plant, Ferrexpo currently encapsulates the potential of a settlement in Ukraine,’ the Peel Hunt report notes. ‘A settlement, allowing far cheaper shipping of Ferrexpo’s pellets to markets, could see the shares recover back towards the 300p to 400p level where they traded in late 2020 to early 2022.’
This, however, assumes there is no ‘scorched earth or wanton destruction’ of infrastructure or Ferrexpo assets as a result of any move for peace, Peel Hunt notes.
Trump Media Technology Group
Set up by Trump after he was moved from Twitter in 2021, shares in the company behind the president-elect’s social media platform Truth Social have closely tracked his electoral prospects.
They soared by 35pc in early trading today, adding £1billion to the value of Trump’s near 60pc stake in the company, as it became clear he was returning to the White House.
That is likely to drive traffic on to the platform, further boosting the shares. There is also speculation that X – which was formerly called Twitter and is owned by Trump ally Elon Musk – may be planning to buy the company.
There is also speculation that X may be planning to buy the media company
Tesla
Talking of Musk, Tesla shares are also making strides in the wake of the election results with analysts tipping the stock to rise further.
Daniel Ives, of Wedbush Securities, believes the return of Trump could push Tesla shares up from around $250 before the result to as much as $300 – giving it a value of $1trillion.
‘The biggest positive from a Trump win would be for Tesla and Musk,’ he says, noting that while the end of tax breaks for electric vehicles would be bad for the industry at large, it could be ‘a huge positive’ for Tesla because of its dominant position.
‘Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players from flooding the US market over the coming years,’ Ives explains.
There are concerns, however, that Musk does not spend enough time running Tesla given distractions including his support for Trump and other business interests including Space X.
‘The biggest positive from a Trump win would be for Tesla and Musk,’ expert Daniel Ives says
Bitcoin
Bitcoin surged to a record high above $75,000 as it became clear Trump was on course to win the presidency.
Crypto experts and enthusiasts believe he will usher in a softer line on regulation for the industry.
Neal Keane, head of global sales trading at financial group ADSS, says bitcoin is on course to reach $100,000 by the end of next year.
Standard Chartered analysts are even more bullish, pencilling in $125,000 by the end of this year and even suggesting $200,000 by late 2025.
Sceptics, however, warn that bitcoin has no intrinsic value and anyone who does invest should be prepared to lose everything.
Artemis US Smaller Companies
The ‘American First’ push is likely to benefit small and mid-cap stocks in the US which, according to Nick Wood, head of fund research at Quilter Cheviot, are ‘currently undervalued compared to mega caps’.
He argues that Trump’s focus on domestic companies makes the Artemis US Smaller Companies fund attractive particularly given its ‘strong long-term track record due to excellent stock selection’.
British American Tobacco
A change in regulation of nicotine companies could also present opportunities, says Chris Beckett, head of equity research at Quilter Cheviot.
And a US clampdown on Chinese vaping firms would benefit British American Tobacco, which is the market leader in this area through its Vuse brand.
‘Restricting Chinese imports or holding them to the same standards would be a big positive for BAT,’ says Beckett.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
