Market weighs pros and cons of potential Trump return after shooting

(Alliance News) - In the aftermath of the assassination attempt on Donald Trump over the weekend, market analysts on Monday were chewing over what a second Trump presidency could mean for stocks and monetary policy.

"It seems uncontroversial to suggest that Trump's electoral chances have improved following the weekend's events," Rabobank analysts noted, pointing to improved betting odds from Predictit.

According to deVere Group's found & chief executive officer, Nigel Green, there are three main sectors poised to benefit from another Trump administration.

Firstly, the energy sector - particularly fossil fuels - could see looser regulation, which could cut down on operational costs.

"His past actions, such as rolling back Obama-era climate policies and exiting the Paris Agreement, reflect a preference for less stringent environmental oversight.... A Trump White House could push for increased domestic energy production, boosting the profitability of companies involved in extraction, production, and distribution," Green noted.

Further, Green maintains that Trump's push to rebuild US infrastructure is likely to drive up demand for energy, which would benefit the sector as a whole.

The second industry which could see a boost from Trump's return is financials, Green noted.

"Trump's administration has historically favoured deregulation, aiming to reduce the regulatory burden on financial institutions. With less stringent regulations, banks and financial institutions can expect reduced compliance costs and increased profit margins," the deVere CEO explained.

The third sector primed for growth under a Trump administration would be manufacturing. The former president has emphasised the importance of domestic production in order to reduce dependence on foreign imports, Green noted.

"A return to this policy is likely to include tariffs on foreign goods and incentives for American companies to bring manufacturing back to the US," he added. Extending corporate tax cuts would also be a boon to manufacturers, Green added, freeing up funds for investment and expansion.

According to a CNBC survey which polled 400 investors, traders and money managers in June, 67% believe Trump would be more positive for stocks than incumbent President Joe Biden.

However, while Trump may have presided over a runaway period for stocks in his first four-year term, Rabobank cautioned against assuming it would be the same the second time around.

"The notion that Trump is good for stocks... could prove wide of the mark should his protectionist policies unleash a period of stagflation," noted Rabobank analysts.

If this were to occur, the Federal Reserve would be unable to ease monetary policy as much as it otherwise - "not a stock-positive cocktail", Rabobank noted.

"If the assassination attempt improves Donald Trump's electoral prospects as dramatically as pundits seem to be suggesting, markets may be under-pricing the consequences of universal tariffs and a potential curtailing of Fed independence," Rabobank added.

During his time in office, Trump had openly criticised Fed Chair Jerome Powell, who Trump had nominated himself in 2017.

In April, the Wall Street Journal reported that allies of the Republican presidential hopeful had drafted a document which set out potential policy proposals concerning the central bank. According to the WSJ, the group proposed that Trump should be consulted on interest rate decisions, and that he should be able to remove Powell from his post before the end of his term in 2026. The report was downplayed by the Trump campaign.

By Elizabeth Winter, Alliance News deputy news editor, Global services

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