In the wake of Trump's election victory, we analysed how different sectors performed in response to his pro-business stance and ‘drill-baby-drill' rhetoric. While it’s been well documented that the broad market rose, with the index climbing 3.1% between October 30th and November 8th, we identified that four of the five highest emitting sectors beat the broader market. Industrial manufacturing, oil & gas exploration, and downstream & upstream energy sectors all posted returns between 4.5% and 7.5%. The sole exception among high emitters was utilities (-0.4%), which lagged behind. While concerns about clean energy tax credits played a role, the fall likely stemmed from expectations of higher yields under Trump which typically hamper utility investments.
Despite the strong performance of fossil fuel-related industries, the real story wasn't about traditional energy at all - it was about Elon Musk, with the automotive sector surging 21.2%, driven almost entirely by Tesla's remarkable rally.
While markets clearly show a knee-jerk reaction to political shifts, the longer-term decarbonisation story is more complex. See Emmi's broader analysis here.
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