In a stock market perspective, these were the early casualties among Trump supporters.
After Donald Trump's second stint in the White House, several industries are feeling the heat. The stocks of companies deemed likely losers from his initial executive actions are taking a hit. Fear isn't just brewing in the automotive sector due to hints of potential import tariffs that could fuel American prosperity.
Trump wasted no time in turning campaign promises into action. His inauguration day marked the beginning of controversial executive orders. Market watchers and investors are keeping a close eye on these moves. If anything, the unease and losses are the consequences of Trump's talk of import tariffs, which might bolster USA's economy.
Renewable Energy: The renewable energy sector's stocks are suffering steep declines. Companies like Orsted, Vestas, and Nordex have seen fallouts of up to 17% after Trump's pledge to shelve "green" climate initiatives. His administration has halted the allocation of areas for "massive wind farms" due to perceived landscape destruction and minimal consumer benefits. The Danish company Orsted had to take a significant write-off on a US project, which exacerbated investor fears.
Trump is positioning himself as a champion of fossil fuels. He intends to boost oil and gas production in the USA, relax environmental standards, and abolish legislation promoting a greener future. The new US President even declared an emergency tackling energy production, adding fervor to his "Drill, baby, drill" mantra - a clear departure from historically climate-conscious policies. This move has also negatively impacted the stocks of energy giants RWE, Siemens Energy, and solar technology manufacturer SMA Solar.
Auto Stocks: Concerns about a possible second trade war linger, fueling fears of tariffs. Tension between USA, Canada, and Mexico has resulted in a granted grace period until February, but investors in Europe and Asia are already displaying signs of nervousness. BMW, Volkswagen, Porsche, and Mercedes-Benz have seen stock dips of up to 6% due to apprehensions about tariffs. Smaller players like Stellantis (down 3% in Milan) and Asian manufacturers like Mazda and Honda have also been affected in this context.
European carmakers suffering directly from Mexico tariffs, such as Stellantis and Volkswagen, voiced concerns over the potential impact of US tariffs on consumers and the automotive industry. These tariffs could negatively influence the supply chain dynamics, affecting automotive stocks.
Big Pharma: The pharmaceutical industry faces a critical challenge, partly due to Trump's protectionist policies affecting supply chains. Moreover, the appointment of Robert F. Kennedy Jr. as the US Secretary of Health has sparked fears related to potentially strained vaccine development - Kennedy's history of vaccine skepticism has led to the spread of conspiracy theories. As a result, stock prices of both large and small pharmaceutical companies have plummeted in response to Kennedy's nomination.
While vaccine manufacturers GSK and Sanofi managed to maintain a green outlook in New York early trading, others, like Moderna, continued to decline.
[1] Based on enrichment data, Trump's orders have led to the following impacts:
- Renewable Energy: The disbursement of IRA and IIJA funds for renewable energy development has been paused, affecting financial support for some initiatives. Experts suggest that the impact on the Greenhouse Gas Reduction Fund appears limited due to already distributed allocations. The Trump administration's rollback attempts, including halting wind energy development and revoking EV targets, might stall the USA's progress in clean energy technology.
- Pharmaceutical Industry: This sector is expected to benefit from a more favorable business environment due to the administration’s "pro-business" stance on mergers and acquisitions (M&As) and taxation. The BIOSECURE Act, which aims to halt federal funding to certain Chinese contract manufacturers, could create supply chain challenges in the short term, potentially driving the need for alternative CDMOs. However, these impacts are not explicitly tied to renewable energy or auto stocks.
Nordex, a prominent renewable energy company, has experienced significant stock declines following Trump's pledge to shelve "green" climate initiatives. The administration's halt on the allocation of areas for "massive wind farms" due to perceived landscape destruction and minimal consumer benefits has further exacerbated investor fears for Nordex.
Despite the challenges faced by the renewable energy sector and companies like Nordex under the Trump administration, the pharmaceutical industry, on the other hand, is expected to benefit from a more favorable business environment due to the administration’s "pro-business" stance on mergers and acquisitions (M&As) and taxation.
