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When Donald Trump takes the stage at the Republican National Convention on Thursday evening to accept his party’s third consecutive presidential nomination, he’ll lay out his vision for a “new golden age for America.” Expect the stock market to react.
After surviving an assassination attempt, winning a debate against President Joe Biden, and netting a bevy of big-name endorsements from the tech world, Trump’s prospects of becoming the 47th president of the United States are looking increasingly strong. That puts the so-called “Trump Trade,” or how investors and markets trade based on the promise of a potential Trump administration and its possible policy changes, in play.
Earlier this week, a month-old interview with Trump was released by Bloomberg News where — among other things — Trump laid out his views on Taiwan, clean energy, and JPMorgan Chase’s Jamie Dimon. Trump called for Taiwan to pay the U.S. for defense and criticized the Biden administration’s CHIPS and Science Act, as well as Taiwan’s dominance in the semiconductor industry.
Shares in Taiwan Semiconductor Manufacturing Company, Nvidia, ASML, Applied Materials, Tokyo Electrons and other chipmakers quickly plummeted on Trump’s remarks, with some dropping as much as 12%. Despite TSMC reporting a strong second quarter with profits of $7.6 billion, a 36% year-over-year jump, the stock was down by more than 3% on Thursday. Other tech stocks, including Apple, Google, Microsoft, and Amazon, were also down.
“We have seen a brutal tech sell-off post Trump comments to the media at the RNC about stepping up China tariffs and protecting Taiwan from China which catalyzed a Street panic for semis, AI Revolution names, and Big Tech,” Wedbush analyst Dan Ives wrote in a Thursday note.
“This is just the appetizer comment heading into Trump’s much anticipated keynote speech” at the RNC, he added.
Each day of the GOP’s convention in Milwaukee has focused on a specific theme. Thursday’s is “Make America Great Once Again,” a minor tweak to the former president’s usual slogan, according to the RNC, which says that Trump will “usher in a new golden age for America.”
While it’s not clear exactly what Trump will say Thursday night, the Associated Press reports that he wrote the speech himself and it is expected to be more personal than his usual comments. Wedbush expects “to hear more details around Trump’s broader strategy when dealing with China, tariffs, and Taiwan.”
After Biden quadrupled tariffs on Chinese electric vehicles, Trump called for similar measures “on a lot of other products.” Trump — a self-proclaimed “Tariff Man” — has floated plans for a 60% flat tariff on all Chinese imports, as well as a 10% tariff on almost all imports into the U.S, The Washington Post reported. A 60% tariff on Chinese exports would more than halve China’s annual growth rate, according to UBS.
Goldman Sachs has identified 34 stocks that could outperform the market in a Trump presidency, primarily because they generate all their sales in the U.S. market and would be largely unaffected by increased tariffs. They include telecommunications stocks like Charter Communications and T-Mobile, retailers like Target and Lowe’s, and the bank Wells Fargo.