If Trump takes the win, expect energy stocks—especially in oil, gas, and coal—to catch a bid. He’s been pro-fossil fuels and light on regulation, which could give these sectors room to run. This is contrary to the current prevailing view where the market is thinking the “drill, baby drill” narrative might push US production back higher and cause oil prices to fall. I would expect energy equities to outperform crude in this environment where an element of protectionism is involved. Defense stocks are another area to watch, with military spending likely to ramp up again. However, this is probably an equal opportunity trade between both parties especially with the growing geopolitical escalations. Corporate tax cuts are a possibility, which could create upside for the broader market, particularly in finance and real estate. But with Trump, the China angle comes back into play. If tensions escalate, stocks heavily reliant on China for supply chains could face some heat. This is one the main concerns for oil markets is China demand. The talk is that stimulatory impacts of recent moves by the PBOC on crude demand should start to appear around Q1 of 2025. However, if the tariff wars really get going, this could certainly impact China crude demand and export growth.
If Harris takes the office, green tech and renewables are where we’ll see action. Clean energy—solar, wind, and EVs—would most likely gain from increased government backing. Healthcare could also be in focus, though potentially under more regulation, so consider the mixed bag there for larger healthcare and big pharma companies. On the contrary, small-cap bios might be more favorable under Trump considering his desire to get rates as low as possible, and the debt servicing nature of revenue-missing drug companies might benefit from an easier cost of capital without issuing shares or raising more debt at higher rates. Infrastructure spending could get a boost, bringing industrials and infrastructure tech into play. China-related stocks might get some breathing room if Harris goes with a more diplomatic stance, which could ease some volatility in tech and manufacturing sectors. In fact, I would think that China upside might have some of the best chances under a Harris win and thus might be bullish for global energy prices at the start of 2025.
In both scenarios, energy, defense, and tech stand out, with healthcare and infrastructure as sectors to watch.