Investment

Investment opportunities to consider after Biden’s election win – CNBC

Published

4 years ago

November 10, 2020

President-elect Joe Biden (C) at the W Los Angeles hotel on March 4, 2020 in Los Angeles, California.

Mario Tama | Getty Images

Following Democrat Joe Biden’s projected U.S. election win, CNBC Make It considers where best to put your money.

Global stock markets rallied sharply on Monday, after Biden was named U.S. president-elect over the weekend, and were propelled even higher by promising news of an effective coronavirus vaccine.

The all-important election proved closer than expected, with forecasts of a Democratic “blue wave” — which many financial analysts had expected — quashed. The projected Democratic House and a Republican Senate also look likely to limit the amount of dramatic policy change Biden could enact as president.

But what does this mean for markets?

Split Congress

David Henry, investment manager at U.K. firm Quilter Cheviot, told CNBC via email that history suggests this election outcome could actually be the “best-case scenario” for stock investors.

Analysis of all possible political scenarios going back to 1945, he said, showed that a Democratic president alongside a split Congress generated the best average annual returns for the U.S. stock market, of nearly 14% in dollar terms.

As it stands, the Democratic party is projected retain its hold of the House of Representatives. Control of the Senate is still to be determined, with run-off elections for two seats in the state of Georgia in January.

However, asset manager BlackRock said Monday that a Democratic takeover of the Senate looked unlikely. As such, it said a split Congress would constrain the ability of a Biden administration to introduce a larger economic stimulus package, public spending, tax or health reform, and climate related-legislation.

When it comes to specific stocks, Quilter Cheviot’s Henry said that if Congress was split, there wouldn’t be “strong, single-minded legislature to curb excessively successful business models.”

“We should expect companies which were doing well before the election to continue doing well,” he added.

According to Willem Sels, chief market strategist at HSBC Global Private Banking, technology and healthcare stocks were likely to benefit, as markets have “feared more regulation” in these sectors.

As such, HSBC remains positive on technology themes such as online consumption, automation, 5G and health tech, Sels added.

‘Fewer trade wars … more trade negotiations’

The 2020 election followed a difficult four years for international relations under current President Donald Trump, who sparked a trade war with China and multiple disagreements with Europe.

Louise Dudley, global equities portfolio manager at investment manager Federated Hermes, told CNBC over the phone that a Biden presidency could see a possibly “softer … certainly more collaborative” approach to global trade relations.

She said this would likely mean less “macro, top-down” stock market volatility, as seen over the last few years with Trump, with “maybe fewer trade wars and maybe more trade negotiations.”

This would create a better business environment for companies that thrive on certainty, Dudley added.

Quilter Cheviot’s Henry said that if the U.S. became “more outward looking … with some kind of move back towards globalization” under Biden, he expected the benefit of this to “filter out globally.”

“Regions which are a little more sensitive to global economic growth would likely benefit – Europe and Japan in particular, through their prominent manufacturing sectors,” he said.

Climate change

Even with the constraints of a likely split Congress, Dudley highlighted Biden’s plans to tackle climate change as another area for investors to watch.

Biden has pledged to rejoin the Paris Agreement, the international plan for tackling climate change, which Trump announced the U.S.’s withdrawal from in 2017. Biden also has plans for the U.S. to reach net-zero carbon emissions by 2050.

Dudley said this could again be seen as a “collaborative move,” as the likes of China and Europe have also implemented similar climate goals.

In the U.S., she suggested possible increased infrastructure spending around this environmental refocus would benefit industries such as electric vehicles, batteries, wind and solar.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

1 week ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “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.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

4 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

1 month ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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