November 22, 2024
ETF Strategies to Consider as Trump Nears Victory #NewsETFs

ETF Strategies to Consider as Trump Nears Victory #NewsETFs

CashNews.co

Republican candidate Donald Trump claimed victory in the 2024 U.S. presidential election after Fox News projected that he had defeated his Democratic rival Kamala Harris. Control of the U.S. Senate shifted to Republicans, Fox News projected.

The Associated Press called that the former president secured North Carolina, Georgia, and Pennsylvania — three critical swing states. Dow, S&P, Nasdaq futures jumped on the expected Trump victory. All states have now closed their respective polling stations. So far, the AP assesses that Trump has secured 267 electoral college votes, while Harris has claimed 224.

Against this backdrop, below we highlight a few winning ETF strategies that could be gainful ahead.

The dollar touched its highest level in a year as Donald Trump took the lead in the U.S. presidential race. This led to a significant increase in Treasury yields due to speculation that his policies would maintain elevated U.S. interest rates. Futures tied to the 10-year Treasury note rose over 12 basis points to trade around 4.4%.

Although Trump has advocated for a weaker dollar, investors believe his policies will increase inflation and slow the pace of the Federal Reserve’s interest-rate cuts, eventually boosting the greenback. Trump promised to cut taxes and impose hefty tariffs on imports. This will hurt the currencies of some of America’s biggest trading partners.

In this scenario, investors should play the pureplay U.S. dollar ETFs like Invesco DB US Dollar Index Bullish Fund UUP. Meanwhile, the gold ETF SPDR Gold Shares GLD may fall as the metal is priced in the greenback.

On the other hand, the dollar’s strength weakened the yen. The Japanese yen (JPY=X) sank to its lowest since July. This has boosted the export-centric Japanese equity gauges. Japan’s tech-heavy Nikkei 225 climbed 2.6%, while the broader Topix stock index gained 1.9%. WisdomTree Japan Hedged Equity ETF DXJ should be in a sweet spot.

During his previous term, Trump became known for imposing tariffs on Chinese imports. China also responded with tit-for-tat tariffs. We may see another round of trade war with China now. In China, Shanghai’s blue-chip CSI 300 closed 0.5% lower, and Hong Kong’s benchmark Hang Seng was down 2.3%.

The Hang Seng China Enterprises Index fell 2.6%. iShares MSCI China ETF MCHI lost 2.4% in premarket on Nov. 6, 2024. Investors may play inverse China ETF ProShares UltraShort FTSE China 50 FXP for some quick gains. The ETF added 4.6% in the premarket on Nov. 6.

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