Stocks to watch as Biden and Trump vie for presidency
July 3 (Reuters) -The first U.S. presidential debate saw President Joe Biden turning in a fitful performance, especially at the beginning, as he exchanged barbs with former President Trump on abortion, immigration, the wars in Ukraine and Gaza and even their golf games.
Both candidates defended their handling of the economy ahead of the Nov. 5 election rematch, which opinion polls show has virtually been a tied race for months.
Here is a look at the stocks that are likely to be impacted and how, depending on who comes to power:
FINANCIALS
UBS accounts for the prospect of less stringent capital and liquidity rules and easing financial regulation under a second Trump administration.
The brokerage sees benefits for big banks like JPMorgan & Chase JPM.N, Bank of America BAC.N, Wells Fargo WFC.N and smaller lenders including Discover Financial DFS.N, KeyCorp KEY.N and Synchrony Financial SYF.N.
SOLAR STOCKS
J.P.Morgan analysts believe opposition to the green revolution by Trump and other Republicans could pose a risk to investments in clean energy manufacturing, facilitated by the tax incentives in the Inflation Reduction Act of 2022.
UBS sees a second Biden government keeping those incentives intact for solar manufacturers such as First Solar FSLR.O, NextEra Energy NEE.N and Sunrun RUN.O.
CLEAN ENERGY AND OIL COMPANIES
Continued support for electrification and blue and green hydrogen production under a Biden administration could boost stocks such as Eaton ETN.N, Quanta Services PWR.N, Tesla TSLA.O and Air Products and Chemicals APD.N, according to UBS.
Existing incentives from the present government would continue driving advantages for energy-efficient product manufacturers such as Johnson Controls JCI.N and Trane Technologies TT.N, as well as waste management companies with recycling infrastructure such as Waste Management WM.N and Republic Services RSG.N.
However, increased oil and natural gas investment, more drilling activity and higher natural gas exports could benefit producers such as Exxon Mobil XOM.N, Cheniere Energy LNG.N and ConocoPhillips COP.N under Trump 2.0.
TARIFFS
A second Trump administration is expected to be much more protectionist in terms of import tariffs. "The consumer discretionary sector is exposed in that environment," UBS analysts say.
As president, Trump started a tariff war with China and has floated tariffs of 60% or higher on all Chinese goods and a 10% or higher universal tariff on all imports, a move he says will eliminate the trade deficit.
U.S. tariffs on Chinese imports could help domestic manufacturers, namely legacy carmakers Ford F.N and General Motors GM.N and steel producers such as Nucor NUE.N and Steel Dynamics STLD.O, UBS analysts say.
TRUMP-RELATED STOCKS
Investors expect stocks related to Donald Trump to move in tandem with the chances of his winning the presidency. These include Trump Media & Technology DJT.O, in which the former president owns a majority stake, software firm Phunware PHUN.O and video-sharing platform Rumble RUM.O.
PRISON OPERATORS
U.S. prison operators like Geo Group GEO.N and CoreCivic CXW.N are potential beneficiaries of a second Trump administration, on promises of a crackdown on illegal immigration and restrictions on legal immigration by the Republican candidate, which could boost demand for detention centers.
PHARMACEUTICALS AND INSURERS
UBS sees a lower risk of drug price cuts and an inclination towards Medicare Advantage in a Republican-dominated government, which could help drugmakers Eli Lilly and Company LLY.N and Merck MRK.N, as well as health insurers such as Humana HUM.N and UnitedHealth UNH.N.
M&A-RELATED BENEFICIARIES
A second Trump administration would likely take a more lenient approach to antitrust regulation enforcement in the world's biggest economy, according to J.P.Morgan analysts.
UBS expects banks such as Goldman Sachs GS.N, Morgan Stanley MS.N, Lazard LAZ.N and Evercore EVR.N, which benefit from M&A activities, to gain from such a policy change.
SEMICONDUCTOR MANUFACTURING
Given the fierce competition with China on semiconductor chips, UBS expects a second Trump government to drive support for domestic semiconductor manufacturing companies such as Applied Materials AMAT.O, KLA Corp KLAC.O, Intel INTC.O and Texas Instruments TXN.O.
AGRICULTURAL SUPPORT
As more tariffs on Chinese imports are proposed under Trump 2.0, more federal assistance could be provided to farmers for lost exports amid the trade war. These initiatives could help agricultural product manufacturers and suppliers such as Deere and Co DE.N and Tractor Supply Company TSCO.O, analysts at UBS say.
Reporting by Purvi Agarwal and Medha Singh in Bengaluru; Editing by Pooja Desai
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