What the US election outcome means for ASX shares

In the early evening hours last night, the US election outcome was officially declared.

Despite pollsters having indicated that the race was too tight to call, or a veritable "coin toss" in their words, Republican Donald Trump scored a sweeping win over Democratic candidate Kamala Harris.

While US election results have yet to come in for a few states, former president Trump has been declared the next president of the United States. Trump won both the popular vote and well over the 270 electoral votes required to command a majority and move back into the White House in January.

US stock markets soared on the outcome.

With uncertainty lifted and perhaps eyeing four years of potentially lower personal and corporate tax burdens, investors sent the S&P 500 Index (SP: .INX) up 2.5% overnight.

And the tech heavy Nasdaq Composite Index (NASDAQ: .IXIC) fared even better, closing up 3.0%.

As for ASX shares, the S&P/ASX 200 Index (ASX: XJO) was up 0.4% in early trade today following news of the US election. The benchmark index has since dropped into the red, down 0.3% in early afternoon trade.

Breaking today's market performance down by some of the major sectors, technology stocks are outperforming on the heels of the US election, with the S&P/ASX 200 Information Technology Index (ASX: XIJ) up 0.1%.

Energy shares are also rallying, sending the S&P/ASX 200 Energy Index (ASX: XEJ) up 1.7%, while resources shares have boosted the S&P/ASX 200 Resource Index (ASX: XJR) by 0.7%.

Financial stocks are broadly catching headwinds, sending the S&P/ASX 200 Financials Index (ASX: XFJ) down 0.3%.

Consumer discretionary stocks are feeling the heat, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) down 1.0%. And healthcare shares are also well into the red, with the S&P/ASX 200 Health Care Index (ASX: XHJ) down 0.8%.

In the crypto markets, Bitcoin (CRYPTO: BTC) topped US$76,460 (AU$116,769) earlier today for the first time ever, with Trump's policies expected to be much more supportive of cryptos.

"Bitcoin has hit its new all-time high. If you want evidence of the Trump effect, that's it," Sydel Sierra, founder of Digital Wealth Group, said (quoted by The Australian).

Commenting on the US election, Karl Morris, CEO of Ord Minnett, said:

Trump is seen as significantly more business friendly. We've seen a strong rally in some key sectors and stocks that could benefit from a Trump win. Examples include Block Inc (ASX: SQ2), which has a strong connection to cryptocurrencies, which have also rallied strongly, given Trump's support.

Morris noted that ASX shares which tend to perform better amid higher bond (and interest rate) yields, including Insurance Australia Group Ltd (ASX: IAG), QBE Insurance Group Ltd (ASX: QBE) and Suncorp Group Ltd (ASX: SUN), could enjoy some sustained tailwinds from the US election outcome.

Morris also said ASX shares involved in the US housing markets should get a boost following Trump's win, citing companies including James Hardie Industries PLC (ASX: JHX), BlueScope Steel Ltd (ASX: BSL), Reliance Worldwide Corp Ltd (ASX: RWC) and Reece Ltd (ASX: REH).

Although marching higher today, ASX energy shares like Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) could come under pressure after the US election, with Trump likely to press for increased US oil and gas exploration and production.

TechnologyOne CEO Edward Chung cited the potential impacts of Trump's "aggressive America First policies".

According to Chung (quoted by The Australian), "The US already requires 65% local content in anything the government buys and that is going to increase to 75% by 2029."

Flight Centre Travel Group Ltd (ASX: FLT) and Treasury Wine Estates Ltd (ASX: TWE) are among the ASX shares that have a large operating footprint in the US.

As does ASX 200 biotech stock CSL Ltd (ASX: CSL).

A CSL spokesman said the company "supports policies that catalyse biopharmaceutical innovation and that ensure patient access to therapies.".

He added:

We are prepared to work with stakeholders across the political spectrum to achieve these goals. We are ready to work with members of both parties to ensure they understand the importance of biomedical innovation and the role we can play to serve patient's needs and public health.

One of the biggest concerns for ASX shares following the US election is a return to the potential trade war with China. Trump is eyeing tariffs of up to 60%, which could hit China's already struggling economy and, in turn, lower demand for commodities like iron ore and coal.

This could create potential headwinds for ASX mining giants like Fortescue Ltd (ASX: FMG), BHP Group Ltd (ASX: BHP), and Rio Tinto Ltd (ASX: RIO).

Commenting on the potential impacts of a trade war on the heels of the US election, Jim Clayton, CEO of kitchen and home appliance company Breville Group Ltd (ASX: BRG), said at this morning's AGM, "Now that Trump has won the US Presidential election, the near-term risk of material tariff increases on consumer goods coming out of China has solidified, triggering two action items."

He added:

We will continue our inventory build in the US, unabated, likely until the increased tariffs are enforced; and we will move 120v production out of China, SKU-by-SKU, as quickly as possible, which is the acceleration of a project we started two years ago. We expect to be 80/20 on this project by the end of 2025.