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Franklin Templeton: Energy, Financial Services, and Small Stocks Were the Biggest Winners

AInvestSunday, Nov 10, 2024 10:00 pm ET
1min read

Christy Tan, investment strategist at Franklin Templeton Research Institute, comments on the US election, saying that sectors such as fossil fuel energy companies, the financial services industry and small-cap companies will benefit from a more favourable regulatory environment, making them the biggest winners. The pharmaceutical industry's outlook will also become clearer as concerns about prescription drug price caps fade.

With the election results in mind, it is almost certain that Trump's tax cuts in 2017 will be extended, with corporate tax rates likely to be reduced (to around 15% statutory) and corporate regulation will be overhauled. Whether tariffs will be expanded in size and scope as Trump campaigned is still unknown, and will depend on the outcome of negotiations with trade partners and the active participation of the business community.

Fixed income, the market broadly expects and fears that the government will issue more long bonds to fund short-term spending, leading to higher long bond yields. However, for investors looking six to 12 months ahead, the Fed's commitment to a loose cycle and the expectation of an overall environment that is favourable to fixed income investments will help diversify portfolios. The 10-year Treasury yield is expected to fall to 3.75% by the end of 2025, while the federal funds rate is expected to fall to 3.6%.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.