U.S. President-elect Donald Trump’s unexpected victory over Clinton was presumed to take the global market in shock thanks to his uncertain or rather controversial trade, immigration and geopolitical policies. Market futures started moving in that downing direction as Trump started taking lead, but finally showed a dead cat bounce ushering gains on all the three key U.S. equity gauges (read: Trump Triumphs: Stocks & ETFs to Rock or Shock).
S&P 500 based SPY, Dow Jones based DIA and Nasdaq-based QQQ registered about 1.1%, 1.41% and 0.5% gain, respectively, on November 9 probably on Trump's conciliatory acceptance speech. All gauges were in the red in afterhours trading though. No wonder, markets will remain volatile in the coming days.
But there are definitely some winning corners in the market which investors should keep a tab on. In fact, on the day Trump was elected U.S. president, plenty of ETFs logged massive gains and hit a 52-week high.
Below we highlight such wining sector ETFs.
With Trump highly expected to bring U.S. manufacturing jobs back to the country and strictly oppose outsourcing, the industrial sector may have started cheering his win. It is widely believed that North America and Western Europe are high-cost nations and Latin America, Eastern Europe, and most of Asia — especially China — are low cost destinations. This divide is seen as the reason for the rise in manufacturing offshoring in recent times.
But Trump’s win now may set the trend for manufacturing ‘reshoring’. This has probably pushed First Trust RBA American Industrial Renaissance TM ETF AIRR higher by over 6% on November 9. JHancock Multifactor Industrials ETF JHMI, Fidelity MSCI Industrials Index (FIDU),Vanguard Industrials ETF VIS and ProShares Ultra Industrials UXI were up over 4.4%, 2.8%, 2.5% and 3.5%, respectively.
There are two reasons why financial ETFs performed better on November 9. First, historically, financial stocks have performed better with republicans in the White House thanks to their tolerant policies.
Secondly, benchmark U.S. Treasury bond yields shot up to 2.07% on November 9 from 1.88% the day earlier, marking the largest one-day rise since July 2013. U.S. has not seen 2% benchmark yield in over nine months. His vows to cut taxes and boost spending plans particularly on infrastructure boosted inflation expectations, pushing bond yields higher (read: ETF Strategies for a Rising Rate Environment).
As a result, financial ETFs soared. However, since Trump intends to separate the big banks’ commercial and investment banking arms, it is likely for smaller-scale regional banks to notch fat gains. So, SPDR S&P Regional Banking ETF KRE, KBW Regional Banking Powershares KBWR and iShares U.S. Regional Banks ETF IAT added about 5.6%, 5.4% and over 5.1% on that day, respectively (read: Regional Bank ETFs: What Investors Need to Know).
SPDR S&P Bank ETFKBE and KBW Bank Powershares KBWB were up about 5.2% and 5%, respectively. SPDR S&P Insurance ETF KIE and S&P Smallcap Financials PSCF advanced 2% and 3.3%, respectively on that day and touched a 52-week high. There are several other financial ETFs that peaked a level not seen in one year.
Needless to say, Trump is envisaged as being aggressive in foreign policy. He stressed the need for additional investments in missile defense in Europe. So, all three defense and aerospace ETFsSPDR S&P Aerospace & Defense XAR, iShares US Aerospace & Defense ITA and Aerospace & Defense Powershares PPA flied high and added 5.1%, 4.3% and 4.5%, respectively (read: 3 ETFs to Buy on Encouraging Aerospace & Defense Earnings).
Donald Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. In fact, he is expected to offer $137 billion in tax credits to private construction companies undertaking infrastructure projects. So, materials ETFs like PowerSharess S&P Smallcap Materials PSCM, CMCI Industrial Mtls TR ETN UBS E-Tracs UBM and iShares S&P Global Materials MXI) added over 4.1%, 6.3% and 1.6%, respectively.
Plus, raw materials or metals needed in infrastructure like steel and copper ETFs also surged on November 9. Steel ETF Market Vectors SLX, DJ-UBS Nickel TR Sub-Idx ETN iPath JJN and G-X Copper Miners ETF COPX also added about 6.4%, 4.6% and 3.8% respectively. However, investors should note that a more conducive manufacturing environment in China also played a role in setting these metal ETFs northbound.
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SPDR-DJ IND AVG (DIA): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
VIPERS-INDUS (VIS): ETF Research Reports
VANECK-STEEL (SLX): ETF Research Reports
SPDR-KBW BANK (KBE): ETF Research Reports
ISHARS-US AEROS (ITA): ETF Research Reports
ISHARS-GL MT (MXI): ETF Research Reports
JH-M-F INDUS (JHMI): ETF Research Reports
IPATH-BB NCKL (JJN): ETF Research Reports
PWRSH-SP SC MAT (PSCM): ETF Research Reports
SPDR-KBW REG BK (KRE): ETF Research Reports
ISHARS-US RG BK (IAT): ETF Research Reports
PWRSH-KBW RBP (KBWR): ETF Research Reports
PRO-ULT INDU (UXI): ETF Research Reports
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