Donald Trump is making a historic return to the White House following a strong showing in Tuesday’s U.S. election. In congressional races, Trump’s Republican party won a majority in the Senate, but counting continues for control of the House.
Impact focused investors — particularly those focused on sectors like renewable energy and healthcare — could see a second Trump administration and a Republican-controlled Congress rapidly roll back Biden-era initiatives.
Tobin Marcus, a macro strategist at Wolfe Research, said in a research note for clients published early Wednesday that House control is relevant to markets primarily in terms of fiscal questions, like tax cuts, IRA rollback, Affordable Care Act (ACA) tax credits, Medicaid cuts, and deficits/rates.
“If Republicans fall short in the House, that would be bullish for clean energy and for healthcare names levered to Medicaid/ACA, and bearish for REITs and MLPs based on sector-specific tax risks,” Marcus added.
The potential impact on U.S. equity markets of these policy shifts may be dramatic.
During the lead-up to the election, Dan Clifton, head of policy research at Strategas, constructed stock portfolios levered to a victory by either party. Key themes represented by the basket most sensitive to the political fortunes of Democrats included electric vehicles and green energy stocks, like Clearway Energy CWEN .
Meanwhile, stocks like insurance giant HCA Healthcare HCA and consumer staples companies such as General Mills GIS could face headwinds if Republican leaders undermine ACA subsidies and safety net support.
If Republicans win the House, among the likely policy changes that a Republican-controlled Washington would pursue is a second withdrawal from the Paris Agreement on climate change.
Trump withdrew from the climate agreement, but President Joe Biden rejoined on his first day in office in 2021. According to some analysts, this retreat could leave China as the de facto leader of the international body.
More stories we’re tracking at Equities:
UBS predicts China to hit peak oil demand by 2029
In a report issued on Wednesday, the UBS energy research team led by Amily Guo concluded that China will reach peak oil demand by 2029. According to UBS analysis, China’s oil consumption — which expanded between 2010 and 2023 to account for 54% of global demand — will moderate by 22% in the coming half decade as increased renewable energy and electric vehicle adoption shift the world’s second largest economy away from fossil fuels.
World Bank says Poland reaching net-zero targets will boost growth.
The World Bank released a new report on Wednesday projecting that reaching net-zero carbon targets by 2050 will significantly boost Poland’s economic competitiveness. Currently Poland is the world’s 9th largest coal consumer despite ranking as the 21st largest economy and the 37th by population.
Poland has pledged to eliminate coal mining by 2049 as part of an EU shift from fossil fuels. The World Bank estimates that Poland — with an estimated 40,000 premature deaths per year, currently has the highest number of deaths attributable to air pollution in Europe.
Oklahoma anti-renewable energy law heads to state Supreme Court
The Oklahoma Council of Public Affairs (OCPA), an anti-environmental lobbying group, released a statement on Tuesday arguing that the Oklahoma Public Employees’ Retirement System (OPERS) decision to reduce portfolio allocations to fossil fuel producers has “already cost the state a million dollars annually.”
OPCA has lobbied for enforcement of the Energy Discrimination Elimination Act. The legislation passed in 2022 aims to prevent public funds from eliminating oil, gas, and coal producers from their investments. Currently the law is not being enforced as litigation brought by OPERS works its way to the Oklahoma Supreme Court.
Read more: Impact portfolio managers across the pond are closely watching U.S. election
