The Trump Trade: presidential election drives surge in US share dealing

The American presidential election triggered a boom in US share dealing on the AJ Bell platform, with approximately triple the average value of sells and buys, and over twice the average daily trade volume, year-to-date.

Source: AJ Bell, 6 November 2024. Based on net trades.

High trading levels were also recorded over the following two days after Donald Trump won, making the US election one of the most powerful drivers for US share trades in recent years.

Given how US equities have delivered outsized gains over the past decade or so, more investors now feel confident buying and selling overseas-listed stocks and interest levels remain high in opportunities across the S&P 500, Nasdaq and Dow Jones.

With the race to the White House a closely fought battle right up until voting day, it was hard for many investors to confidently predict who would win and therefore position their portfolios according to who they thought would be winners and losers. It was only when the results of the different swing states pointed to Trump winning that many investors felt confident enough to place their trades.

The result was declared on 6 November and that day saw two thirds as many ‘sell’ trades as buys for US-listed stocks on AJ Bell’s website and app. That suggests investors were either spooked by the election result or they felt they had made the wrong trade ahead of the event.

Tesla up on Musk’s proximity to Trump

Tesla was the top-traded stock on results day, and more people sold than bought it. Bears might have taken the view that Trump will be the anti-green leader of the Western world, rolling back elements of the Inflation Reduction Act which was designed to promote green energy, among other things. However, in theory, Tesla could lose out if Trump scraps a tax credit for certain electric vehicles.

Bulls might point to Tesla boss Elon Musk being the most prominent business figure during Trump’s election campaigning, often appearing alongside the president elect. He’s now got a ring-side seat and has Trump’s ear, meaning he could have considerable influence on decisions that might also benefit Tesla and another one of his businesses, SpaceX. The bulls would have picked the winning trade as Tesla’s share price has gone up by 35% since the election was called.

Potential Taiwan measures could threaten Nvidia’s AI dominance

More investors also sold rather than bought Nvidia on the US election results day. The stock has led the US market over the past two years as the optimal play on the red-hot AI theme. The risk to the investment case has grown exponentially after Trump was re-elected. Taiwan’s TSMC is Nvidia’s primary chip manufacturer and it now finds itself exposed to heightened geopolitical risks between China and the US.

China has threatened to invade Taiwan as it wants to occupy the territory. During his election campaign, Trump said Taiwan should pay the US for protection, and this caused a big wobble for shares in semiconductor companies including TSMC and Nvidia. Any sign that Taiwan doesn’t want to go down this route could trouble the market.

TSMC is so crucial not only to Nvidia but also to the general supply chain into the West for microchips. The prospect of heightened uncertainty around the stability of its homeland wouldn’t be good for its shares or its partners’ shares.

MicroStrategy a beneficiary of bitcoin’s rise

There were more buys than sells for MicroStrategy on election results day. Investors have been using this company as a way to play bitcoin without directly owning the cryptocurrency. The American business held 279,420 bitcoin as of 10 November 2024, worth $24 billion at the time of writing (12 November).

During his election campaigning, Trump promised to make America ‘the crypto capital of the planet’, building a strategic reserve of bitcoin. Layer on top expectations he will strip back regulations on the crypto industry and you begin to understand why investors have piled into the digital currency and related stocks.