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Election day in the US is finally here, and the outcome remains on a knife’s edge. The results of the Trump-Harris Presidential runoff could have significant short- and long-term consequences, including for UK stocks and stocks around the world.
Here are two FTSE 100 stocks may rise in value if Donald Trump returns to the White House.
BAE Systems
Defense businesses are similar BAE Systems (LSE:BA.) has risen in value since Russia invaded Ukraine in 2022. The demand for weapons has increased as the West has restocked its arsenal after the end of the Cold War. It is a trend widely reported to continue as political tensions rise.
Defense sector sales could get an extra shot in the arm if Trump wins today, too. Military development is one of the priorities he mentioned, including building the ‘Iron Dome’ missile system and implementing extensive modernization.
This may create a windfall for BAE Systems given its status as a top supplier in the US. Last year, the company generated 42% of its revenue from there, making it the company’s largest market.
But it doesn’t end there. A Trump presidency could have significant implications for foreign defense spending.
Criticizing NATO countries for not meeting spending commitments was the last sign of his presidency. And rumors are rife that he will demand that the defense organization raise arms-related spending to 3% of gross domestic product (GDP) if he wins today, up from 2% currently.
Defense businesses like BAE still face threats such as supply chain issues and inflation. But, on balance, I think the FTSE company looks in good shape.
A shell
If his last term in the White House is any guide, the oil industry could be a major beneficiary of Trump’s election victory. Investing in A shell (LSE:SHEL) would be a good play on this theme.
Between 2016 and 2020, the former President introduced a number of measures that promoted fossil fuel producers. He increased the number of drilling leases on state lands, approved pipeline projects like Keystone XL, and rolled back environmental legislation to help businesses cut costs.
Trump’s support for the oil sector has not wavered over the years. On the campaign trail he promised to increase manufacturing as part of his ‘America First’ policy.
Shell could be one of the biggest winners if Trump wins today. It is one of the largest oil and gas producers in the world, and operates in 70 countries. It also receives a large amount of revenue from the US due to its extensive refining operations and upstream assets.
That said, there will still be risks to investing in oil companies, no matter who is defending the election. The oil market is facing oversupply as the Chinese economy cools and new energy comes in abundance. This could keep oil prices on a recent downward trend, hitting producers’ incomes.
In addition, countries are investing heavily in renewable energy to free themselves from oil and gas, which creates a long-term problem. Although Shell’s investments in renewables can help reduce this risk.
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