Democrats are trumping Republicans in stock market race

Donald Trump may not like it, but the US stock market does better under a Democratic president. However, staying invested no matter who is in the White House reaps the biggest rewards of all, new research shows.

With the US presidential race too close to call, broker Charles Schwab has looked at how the S&P 500 index of leading US shares has performed when the Oval Office was either red for Republican or blue for Democrat.

It found that – since 1948 – anyone who kept $10,000 invested in the index only when there was a Republican president would have seen that grow to $312,000 today.

The same sum would today be worth $1.2 million if it was invested only under Democratic presidents, despite both parties having a similar number of terms in office. 

But if that money was kept invested irrespective of who was in power it would have grown to $38 million.

‘From a historical perspective, investors would be better off if they stay in US markets, regardless of which party holds the White House,’ said Richard Flynn, who runs the broker’s UK arm.

US presidents like to take credit when shares do well and blame their predecessor when they tank.

In 2020 Trump called a press conference to hail the Dow Jones topping 30,000, calling the milestone ‘a sacred number’.

‘The US economy is massive and complex. It is always difficult to tie any legislation directly to economic and market outcomes,’ said Flynn.

For those who want to back British firms based on whether Trump or Kamala Harris wins Tuesday’s election, broker Peel Hunt has compiled a list of potential winners. Among its tips for a Trump win are:

• Wood Group – a quarter of the engineer’s sales are in the US, mainly from oil and gas, so incentives to drill would be ‘very positive’
• Ashtead – the plant hire group makes most of its money across the pond, so would gain from any Trump tax cuts on company profits 
• IHG – the hotels group pays ‘a very high level of tax’ in the US so would also benefit from a lower rate 

Meanwhile Peel Hunt’s share tips for a Harris win are:

• Ceres Power – her promotion of green energy would boost the fuel cell technology group as it looks for US licensing partners
• ITM Power – the energy storage and clean fuel company is bidding for electrolyser projects in the US 
• Clarkson – the shipping firm would avoid retaliatory tariffs hitting global trade if Trump triumphed

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