Analysts at Goldman Sachs, JPMorgan and other institutions say industrial metals such as copper will be major beneficiaries of new stimulus policies and infrastructure plans.
Agriculture: If Biden relaxes tariffs on Chinese goods, China's imports of American agricultural products will increase. However, his clean energy policies could erode demand for corn- and soybean-based biofuels. In addition, some left-leaning Democrats may take a tougher stance toward large agricultural companies. Senators Elizabeth Warren and Cory Booker have stated that the U.S. response to the COVID-19 outbreaks at meat processing plants this year was "feeble."
Copper and Industrial Metals: Analysts at Goldman Sachs, JPMorgan and other institutions say industrial metals such as copper will be major beneficiaries of new stimulus policies and infrastructure plans. However, if there is a divided government, the upside potential for industrial metals such as copper will be more limited or delayed. Goldman Sachs notes that global green infrastructure spending will drive demand for metals over the coming years, stating that Europe and China already have a head start in terms of policy environment, and the Biden administration will strive to catch up in this regard.
Energy: Biden's victory could reshape the U.S. energy industry for years to come. However, if Republicans continue to control the Senate, Biden's room for maneuver will be very limited. Biden has promised to invest trillions of dollars to accelerate the energy transition, cut emissions, and curb climate change. He has also pledged to ban new shale oil drilling on federal lands, likely through an executive order. This move would restrict drilling activities of shale oil companies in many U.S. states, including New Mexico. The Trump administration relaxed environmental regulations; Biden will reverse this policy and crack down hard on greenhouse gas emissions, which could increase costs for oil and gas companies.
Gold: After the election, new U.S. stimulus policies will put pressure on the dollar and intensify inflationary pressure, thereby enhancing gold's status as a store of value. Michael Cuggino, portfolio manager at Permanent Portfolio Family of Funds, said there are two driving forces behind gold prices hitting record highs: negative real yields and unprecedented liquidity provided by central banks and governments around the world. No matter who is elected U.S. president, these two factors supporting gold prices will not change.
Steel and Aluminum: These industries were a focus of Trump's tariffs and trade policies. Trade issues are not Biden's top priority, and producers and consumers have already adjusted, so the 25% tariff on steel imports and the 10% tariff on aluminum imports will not be lifted in the short term. On the contrary, removing these tariffs would anger voters in the Midwest and also prompt trade-protection lobbying by producers including United States Steel (NYSE: X), Century Aluminum (NASDAQ: CENX), and the United Steelworkers union. Therefore, Biden is more likely to keep these tariffs in place while conducting multilateral trade negotiations with key allies such as the EU, Japan, and Canada to counter Chinese companies, which account for more than half of global steel and aluminum production. Trump was openly opposed to multilateral trade cooperation, so this would be a major shift in trade policy.