5 key Trump policies that could impact equities: Jefferies

As the 2024 U.S. presidential election draws near, Jefferies analysts have identified five key policies proposed by former President Donald Trump that could significantly impact equities if he wins.

With polls showing Trump's chances increasing, the firm says these policies are becoming crucial for investors to consider.

Extension of Tax Cuts and Jobs Act (TCJA) Benefits: Trump's plans to extend the TCJA benefits, set to expire next year, could lead to continued tax relief for businesses and individuals. The firm notes that this extension would likely boost consumer spending and corporate profitability, positively affecting domestic-focused consumer services companies.

Reduction in Corporate Tax Rates: A further reduction in corporate tax rates could enhance the profitability of U.S. companies, particularly benefiting domestic-focused companies with high effective tax rates. This policy is expected to drive market optimism and investment in onshoring capex plays, excluding clean energy.

Increase in Tariffs on Goods Imports: Trump's intention to increase tariffs, especially on Chinese goods, could lead to higher U.S. inflation and influence global trade dynamics. This policy may favor alternative currency plays like crypto-related equities and gold miners, while potentially harming goods companies with significant U.S. sales exposure.

Pullback from Climate-Related Initiatives and Increased Oil Drilling: A rollback of climate initiatives coupled with expanded oil drilling could boost the energy sector, benefiting oil-related capex plays, says Jefferies. Conversely, this shift might negatively impact clean energy beneficiaries, such as solar, EV, and wind companies.

Withdrawal from Global Flashpoints: The firm says that easing tensions in global hotspots like Russia-Ukraine could reduce geopolitical risks and support market stability. This policy might favor sectors that are negatively correlated with the Commodity Research Bureau (CRB) index and oil prices.

Jefferies highlights that these potential Trump policies could create both opportunities and challenges across various sectors, making it essential for investors to stay informed and adapt their strategies accordingly.