EV, Chips, Crypto Stocks in Crosshairs as Biden, Trump Face Off

(Bloomberg) -- The stock market has largely brushed off the uncertainty around November’s US election. That may change Thursday evening, when President Joe Biden and former President Donald Trump face off in the first debate in the race.

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From taxes and tariffs to electric cars, cryptocurrencies and more, the two candidates will be locking horns on a host of policies that can potentially send stocks swinging in various corners of the market.

“The first presidential debate on Thursday is a good reminder for investors to keep their emotions in check and avoid making impulsive investment decisions in anticipation of election outcomes,” said Mark Hackett, chief of investment research at Nationwide.

Investors have had a lot to contend with in recent months. Inflationary pressures remain stubbornly high, which means the Federal Reserve’s policy trajectory remains unclear, and the geopolitical backdrop is growing increasingly tense. The rematch between two candidates that are so well-known by voters has resulted in tight polling results, suggesting the contest may remain too close to call even until Election Day.

Here are the stocks and sectors in focus ahead of the widely anticipated debate between Biden and Trump, the presumptive Republican nominee.

EVs and Clean Energy

Trade relations with other countries, especially China, are a major focus in this election, and will likely feature prominently in the debate. Electric vehicles, battery makers and other EV suppliers are among the groups that can see major impacts from new tariffs and any retaliatory action from China.

Biden last month unveiled sweeping tariff hikes on a range of Chinese imports including EVs, batteries, solar cells, critical minerals, steel, aluminum and semiconductors. Trump, on his part, has talked about a 10% across-the-board tariff and steeper levies on Chinese-made goods. But risks to EV and clean energy companies do not end there. Trump has also said he will entirely reverse Biden’s EV policy.

Stocks that may move include EV-makers Tesla Inc., Rivian Automotive Inc. and Lucid Group Inc., charging network operators such as ChargePoint Holdings Inc., Beam Global, Blink Charging Co. Solar stocks that may react include First Solar Inc., Sunrun Inc. and Enphase Energy Inc.

Asian stocks to watch include Chinese EV makers such as BYD Co. and Zhejiang Geely Holding Group Co., which are effectively blocked from exporting directly to the US and were recently dealt another blow by the EU’s plans to hike import tariffs. Battery makers such as Contemporary Amperex Technology Co. will also be in focus.


Chipmakers, especially those with high exposure to China, will likely swing if tariff talk escalates during the debate. Some prominent names include chipmakers Nvidia Corp., Broadcom Inc., and Qualcomm Inc.

Given semiconductor stocks’ — and especially Nvidia’s — outsized weighting on the S&P 500, any big move in the sector can reverberate through equities overall. The Philadelphia Stock Exchange Semiconductor Index could be particularly volatile.

Meanwhile in Asia, Chinese chip-related shares may benefit from any potential escalation in the Sino-US chip war, which could accelerate Beijing’s push to achieving technological self-sufficiency. Watch stocks including Semiconductor Manufacturing International Corp. and Hua Hong Semiconductor Ltd.

China Exposure

Stocks across sectors with high China exposure will likely be volatile as trade and tariffs are hotly debated. A JPMorgan Chase & Co. index of companies with high exposure to the country included Air Products and Chemicals Inc., Celanese Corp., BorgWarner Inc., Otis Worldwide Corp., Agilent Technologies Inc., IPG Photonics Corp. and Jabil Inc., among others.

Crypto and Financials

Trump’s recent ardent courting of Bitcoin miners and his enthusiastic stance on cryptocurrency have put the group under the spotlight. Given stocks related to cryptocurrency typically are a pretty volatile bunch, any prominent mention or promise of a specific regulatory action or policy can spark big moves.

Stocks to watch include Coinbase Global Inc., Marathon Digital Holdings Inc., Riot Platforms Inc., Cleanspark Inc., MicroStrategy Inc. and Cipher Mining Inc., as well as the Bitwise Crypto Industry Innovators ETF.

Traditional Energy

Trump has said he plans to roll back restrictions on domestic oil production, and has a generally pro-oil stance. Further promises on that front can boost stocks like Baker Hughes Co., Exxon Mobil Corp., ConocoPhillips, Occidental Petroleum Corp., among others.

Other Potential Topics

Defense can be a big topic given conflicts in the Middle East and Ukraine, and stocks to watch include Lockheed Martin Corp., Northrop Grumman Corp. and RTX Corp. Access to cannabis has remained a political issue, and thus may creep into the debate as well. Watch Tilray Brands Inc., Canopy Growth Corp., and Curaleaf Holdings Inc., as well as the AdvisorShares Pure US Cannabis ETF.

In a similar vein, gun rights are another highly divisive issue, and can come up during the debate. Smith & Wesson Brands and Sturm Ruger & Co. may move. Drugmakers are “a target of populists in both parties,” according to Stifel’s chief Washington policy strategist, Brian Gardner. Watch the big pharmaceutical companies such as Pfizer Inc., Johnson & Johnson and Eli Lilly & Co., as well as the SPDR S&P Pharmaceuticals ETF.

Currency Woes

Both Republicans and Democrats have so far been fairly united over a hawkish view on China, and as such investors will be monitoring candidates’ language for a further toughening of that stance. With the Chinese yuan already close to the weak end of its daily trading band, further tariff-related depreciation in the local currency will test the People’s Bank of China’s resolve to manage the currency weakness.

“If tariff rhetoric becomes even harsher or if other measures such as tougher restrictions on investing in China are brought up, we believe USD/CNH will be under greater upward pressure towards the previous high in 7.35-7.40,” Citigroup Inc. economists including Daniel Tobon wrote in a note on Wednesday.

Market watchers will also be gauging the likelihood of a Trump victory, which if coupled with a Republican-controlled Congress, is expected to see a surge in Treasury yields and boost the greenback. Key Asian currencies are already testing multi-year lows against the dollar, with the won falling toward the key 1,400 level, while the yen this week blew past a threshold where officials intervened in the market in April. This will raise the risk of currency intervention from South Korean and Japanese authorities. Similarly, central banks in India and Indonesia have been actively supporting their domestic currencies, as the rupiah and rupee hover close to record lows against the greenback.

--With assistance from Marcus Wong and John Cheng.

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