A new presidency in the Free World means that the markets are going to experience massive shake-ups. Even before the inauguration, there had been speculations about what a Trump administration will do to the stock market. Less than a month since President Donald Trump took office, there has already been fundamental changes that are set to affect many sectors. The new policies to be implemented will affect companies in a myriad of ways, and this knowledge can benefit traders immensely. Immediately after Trump’s victory, stocks rallied very well with the Dow Jones closing at 20,000 in the last week of January. The fiscal stimulus promise from the president is one reason for this event. However, it may be a bit early to make a definitive stance on how some of the stocks will perform. Before you buy or sell shares with an online broker such as CMC Markets, learn about the stocks that are worth investing in.
Stocks to Buy
Some companies are bound to benefit more than others under the Trump administration, and these are the shares to put money in.
During his campaign, President Donald Trump emphasised the improvement of infrastructure in the country. Doing this will boost distribution networks for many companies because of the enhanced transportation links. Businesses that rely on long-distance shipping will be ones to watch carefully. Enterprises in the construction sector are also expected to do very well as there will be a lot of work to accomplish to develop infrastructure. Under Trump’s promise to increase infrastructure spending for highways, roads and bridges, companies such as Vulcan Materials that produce construction aggregate will fair very well.
There is also the proposal to build a wall separating the U.S from Mexico, and that is bound to be a grand project. Any company tasked with the construction of the wall will register excellent share prices.
Trump has been known to campaign for private prisons, and that is why the sector is set to see a huge boost. The president has already signed executive orders banning Muslims and refugees from entering the U.S., and that means that organisations that provide detention and correctional services will experience an increase in revenue as the ICE cracks down on immigrants. There will be a lot of deportation cases, and ordinarily, individuals have to go through the judicial system, which includes spending some time in detention facilities. Corporations whose revenues rely on the federal government will see hikes in stock prices.
Protection of the Second Amendment was one of President Trump’s campaign promises. Lifting gun and magazine bans in the country will provide more business to firearm manufacturers and suppliers. Enterprises such as Strum, Ruger & Company and Smith & Wesson have been doing very well lately, and the new administration will only improve performance because of its softer position on gun ownership.
To Watch Out For
Some of the policies that the president intends to implement will have negative effects for some corporations, and these are the shares to be wary of.
When it comes to the health industry, President Trump has vowed to implement aggressive action. He is set to repeal Obama Care, which is an action that will cause a trickle down effect for many pharmaceutical companies. Selling healthcare stocks is the safest bet for a trader.
One of the biggest campaign promises that President Trump made was to force American corporations to manufacture their products at home. Companies such as Apple and Ford that rely on foreign labour and raw materials will suffer massively if that happens. Relocating plants stateside will hinder production in a significant way, causing stocks to tumble. On the other hand, companies such as La-Z-Boy that already have their plants in the U.S will soar in share prices.
Defence and oil are other stocks that are expected to rally in the wake of a Trump presidency. The first few weeks of the new administration have been exhilarating for many markets. As promised, Trump is implementing protectionist policies that aim at returning America to what it was. However, there is fear that he will spark trade wars with countries like China, India and Mexico, which will affect a lot of companies. Individuals looking to invest in the stock market should take some time to evaluate the domino effect of each of these new policies first.