Campaign 2024: Here's what a Republican presidency might mean for business — and stocks

Investors got a glimpse into what a Republican presidency could mean for the markets as eight contenders debated everything from Bidenomics to China to gas prices during the first Republican primary debate.

And while we’re still more than a year out from Election Day on Nov. 5, 2024, it may be time to start thinking about how potential policy changes could impact the market. Given the key themes that emerged from the debate Wednesday night, we asked a few strategists what a Republican presidency could mean for business and Wall Street.

'Unlock American energy'

To no surprise, the Republican field seemed to be in agreement on energy policy, repeatedly calling for energy dominance via the reduction of drilling regulations.

Former Vice President Mike Pence touted the Trump administration’s move to “unleash American energy,” while Vivek Ramaswamy called to “unlock American energy, drill, frack, burn coal, embrace nuclear.”

Former Vice President Mike Pence and Florida Gov. Ron DeSantis listen as businessman Vivek Ramaswamy speaks during break in a Republican presidential primary debate hosted by FOX News Channel Wednesday, Aug. 23, 2023, in Milwaukee. (Morry Gash/AP Photo) (ASSOCIATED PRESS)

Florida Governor Ron DeSantis added, “We’re going to open up all energy production, we’re going to be energy dominant in this country.”

While initially this may sound like a huge win for energy giants Exxon (XOM) and Chevron (CVX), who President Biden has accused of ‘war profiteering’ amid record profits, Portfolio Wealth Advisors CEO Lee Munson warned more production could lead to oversupply, eventually taking a toll on the sector.

“When you look at what happened to oil services under Trump, the glut of oil from the fracking boom led to lower prices and losses for investors,” Munson told Yahoo Finance. “He was too friendly and encouraged a glut.”

GOP targets ESG

ESG — a type of investing that takes into account environmental, social, and governance factors — is a top target for Republicans ahead of the 2024 election.

DeSantis is among the fiercest critics of President Biden’s support of ESG investments. The Florida Governor signed a bill into law earlier this year barring state officials from making ESG investments or ESG bond sales, and in the past has compared environmentally conscious investing to ‘ideological joyrides.’

Maybe not a great idea, said one analyst.

“Markets tend to like the status quo,” Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. “DeSantis has shown that he will intervene in private business to get his point across … That might make some businesses and some investors nervous.”

Sosnick was referring to DeSantis's ongoing legal battle with Disney, which is being closely watched as a sign of how far lawmakers might go to influence corporate ESG policies.

Former President Trump, who was noticeably absent from the first primary debate, has also joined the chorus of Republican lawmakers opposing ESG. In a campaign video released on Truth Social, Trump vowed to support "a law to keep politics away from Americans’ retirement accounts forever.”

“ESG as a term has become demonized,” Sosnick said. “Companies probably won't change their fundamental values but I think they'll change the way that it's expressed.” For example, McDonald’s (MCD) removed the ESG abbreviation from parts of its website earlier this year.

Staying tough on China

Despite offering few details on how to manage the US’s relationship with China, GOP candidates have largely taken an aggressive stance towards Beijing, leading investors to believe tensions will remain high for years to come.

DeSantis has called the US’s current relationship with China ‘abusive.’ Ramaswamy said economic independence from China is the ‘most important foreign policy objective.’ Former UN ambassador, and South Carolina governor, Nikki Haley accused China of ‘taking advantage of America and using our science and tech to advance its military.’ Even Senator Tim Scott, who has been criticized by rivals for being too friendly towards Beijing, is stepping up his rhetoric. He called China ‘the biggest threat to America’s security.’

For investors, this won’t be a big change from the Biden Administration’s current policy.

“Trump is the one who imposed tariffs on China," Sosnick added. "President Biden left them in place and, in many ways, has expanded upon them.”

Escalating tensions between the US and China could put pressure on some chipmakers who have been caught in the crosshairs in recent months. In May, China banned the sale of some Micron (MU) chips in the country, and now, the Biden administration is reportedly considering new restrictions on AI chips made by companies like Nvidia (NVDA) and AMD (AMD).

“Markets want balance, clarity, and most importantly, nothing to actually happen in Washington,” Munson said to sum it all up. “Gridlock is good for business.”

Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.

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