These ASX stocks could benefit from Trump’s tariffs, says broker IG. Picture via Getty Images
Hot Money Monday: Why these 12 ASX stocks could score big under Trump’s trade threats
Experts
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- Trump’s tariffs could raise prices and hit inflation
- RBA concerned about global impact if China suffers
- These ASX stocks could benefit from that
President-elect Donald Trump has threatened to impose steep tariffs of up to 60% on Chinese-made products.
This would make Chinese goods more expensive for US consumers and potentially disrupt trade between the two countries.
Experts believe that it could even lead to higher prices for goods not just in the US, but worldwide including in Australia.
This would put pressure on the Reserve Bank of Australia (RBA) to raise interest rates further to combat rising inflation.
Higher interest rates would obviously help control inflation, but also make borrowing more expensive for consumers and businesses.
The RBA has not yet done detailed scenario analysis but acknowledges the situation is concerning for Australia.
“There are things going in all sorts of directions here. It might be inflationary in some ways, but it might be deflationary,” said RBA Governor, Michele Bullock.
“We have a broad understanding of the way some of these policies, if they are implemented, will work out, but we haven’t done very explicit scenario analysis.”
Why IG thinks these companies could benefit under Trump
For ASX-listed companies, there are certain stocks and sectors that may, in fact, benefit from Trump’s policies, particularly in defence, energy and technology.
These stocks stand to gain mainly from Trump’s policies that promote deregulation, defence spending, and a focus on fossil fuel energy production, as well as free-market healthcare solutions.
Here’s a closer look at the ASX stocks to watch under a Trump presidency, according to broker IG:
Woodside Energy Group (ASX:WDS)
A Trump administration is likely to boost demand for traditional energy sources like oil and gas. This would benefit Woodside, one of Australia’s largest oil and gas producers, which focuses on these resources.
Similar to Woodside, Santos, a key player in natural gas and oil production, could benefit from Trump’s policies favouring fossil fuel production and exports, particularly in liquefied natural gas (LNG), which would see increased demand.
BHP could see benefits in its oil and gas operations if Trump prioritises domestic energy production. BHP’s exposure to energy commodities positions it well under such policies. However, tariffs on China could hurt demand for other commodities like iron ore, given BHP’s ties to the Chinese market.
Austal, a shipbuilder for the US Navy, stands to benefit from increased military spending under Trump. Trump’s focus on defence could lead to more contracts for Austal to build naval vessels.
Electro Optic Systems (ASX:EOS)
EOS, which specialises in defence technology, including space surveillance and remote weapons systems, could also see growth under Trump’s policies that favour increased defence spending, boosting demand for the company’s technologies.
Codan, another company which produces military communication systems and metal detection equipment, would benefit from Trump’s push for higher defence spending, maintaining strong demand for its products.
Xero, a cloud-based accounting software company with a significant presence in the US, could benefit from Trump’s tax reforms and deregulation that would support small businesses, which are Xero’s primary customer base.
Altium, which provides software for designing electronic components, could benefit from Trump’s favourable trade and tax policies, especially if tariffs on electronic components are reduced, making it easier for companies to use its software for product designs.
Block Inc (ASX:SQ2) – owner of Afterpay
Afterpay could benefit from Trump’s light regulation of fintech, which would support the growth of “buy now, pay later” services, allowing easier expansion in the US market.
As a biotechnology leader in blood plasma products, CSL could benefit under Trump’s free-market healthcare policies, which would allow CSL to maintain higher prices for its specialised treatments.
Cochlear, which manufactures hearing implants, could benefit from Trump’s free-market approach to healthcare, which would enable higher pricing for its products in the US.
If Harris had won the election, increased healthcare access under her administration could have led to a broader customer base for ResMed’s products, potentially boosting demand. However, IG believes that ResMed, a leader in respiratory care, would maintain healthy margins under Trump’s free-market policies.
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