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Donald Trump won the most watched American election in history. UK shares rallied as the result became clear, as did those across the Atlantic, S&P 500 breaking new high records.
Markets hate nothing more than uncertainty. So a possible Republican ‘clean sweep’ of Washington helped rally the share markets.
Winning the White House and Congress means Trump will face fewer legislative hurdles, providing a more stable outlook that boosted investor confidence.
Looking beyond the near term, there are a number of UK stocks that I think could get a boost from a Trump presidency. Here’s one – and an exchange-traded fund (ETF) – that I believe could go up in value.
iShares MSCI USA Mid-Cap Equal Weight UCITS ETF
Trump has made trade tariffs his signature last term in office. And he has vowed to bring down the extra cost of importing Chinese and European goods in the near future.
This would give US businesses a shot in the arm. As Hargreaves Lansdowne commentator Victoria Hasler explains: “Trade tariffs favor domestic businesses more than multinational companies, and small companies tend to be more domestically focused.”
He added that “historically smaller companies have tended to outperform their larger counterparts in a falling interest rate environment.”
The combination of Federal Reserve rate cuts and a Trump presidency could boost conditions for local firms.
Investing in iShares MSCI USA Mid-Cap Equal Weight UCITS ETF (LSE:IUSZ) would be worth considering then. It has shares in 332 different companies. And so I get exposure to small cap shares while at the same time increasing my risk.
The fund also splits my money into multiple sectors to provide more leverage. The biggest catch here is the technology business AppLovina merchant Best Buy and biotech specialists Alnylam Pharmaceuticals.
I think the ETF’s average annual return of 11.9% since 2019 may continue during the Trump presidency. However, it would be more vulnerable to any shock in the US economy than other funds with international companies.
QinetiQ Group
Defense businesses are similar QinetiQ Group (LSE:QQ.) could also be big winners from the new Trump administration.
The president-elect has made military spending one of his priorities on the campaign trail. He also continued to demand increased defense spending among the US’s international partners.
QinetiQ, which provides armed forces with engineering, cybersecurity and intelligence services among others, could get a big sales boost in this area. It paid $590m in 2022 to acquire Avantus, a services provider to the Department of Defense, to strengthen its position Stateside.
Revenues are growing from the US and now account for 21% of the group’s total. And encouragingly, QinetiQ says it has “a pipeline of significant opportunities.” This could increase dramatically as a new global arms race intensifies.
I FTSE 250 the company operates in a highly competitive industry. But in the current political climate it can still deliver strong income growth.
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