Wall Street investors began adjusting their strategies in anticipation of potential economic and market shifts should former President Donald Trump regain the presidency. The phenomenon, labeled the “Trump trade,” includes a focus on sectors likely to thrive — informally known as Trump victory stocks. They are based on expectations that Trump’s proposed policies, particularly concerning trade and tariffs, would have significant impacts on the U.S. economy and various industries.

The attempted assassination of Trump has reportedly resulted in an increase in his odds of winning the election. Polymarket, a leading prediction market, saw a jump in Trump’s chances from 60% to 72%.

On the other hand, President Joe Biden withdrew from the 2024 presidential race, ending his reelection bid after a contentious debate with Donald Trump that sparked concerns about his capability to continue in office. The unexpected announcement, made less than four months before the election, dramatically altered a campaign.

Biden, determined to complete his term, swiftly endorsed Vice President Kamala Harris to challenge Trump, urging the Democratic Party to rally behind her. This endorsement positions Harris as the frontrunner for the nomination at the August convention in Chicago.

Sell EUR/USD

Citi’s (NYSE:C) FX analysts point to Trump’s emphasis on trade and relations with the European Union as potential limiting factors for any EUR/USD rallies. European Union leaders are very much braced for major transatlantic tensions on trade.

The bank’s FX strategists also acknowledged Trump’s recent comments on currency issues, where he recognized the challenges posed by a strong dollar. Donald Trump came out numerous times saying he wants a weaker dollar to support U.S. businesses operating abroad.

Despite this fact, strategists from Citi argued that a potential Trump presidential victory is not likely to weaken the U.S. dollar. Instead, the company sees the dollar eventually strengthening, with the euro seen as a good candidate to play the long dollar trade.

Citi’s base case remains that the outcome of the U.S. election, set for November 5, will be positive for the dollar. They anticipate this scenario to be fully reflected in the dollar’s value by the election date.

Strategists have advised against early long USD trades, suggesting that market sentiment is still fluid and could change as the election draws closer and the Democratic candidate’s platform becomes clearer.

However, Citi recommends that investors consider long dollar positions later in the year, around August or September, which is traditionally when markets start to factor in election outcomes more significantly. Given the tensions with the E.U., investors should consider selling any EUR/USD rallies.

Buy Gold

If Donald Trump were to become president again and implement major tariffs on U.S. imports, Citi analysts said such tariffs would not take effect for at least 12 months post-inauguration on January 20, 2025.

This is one of the key reasons why Citi maintains a bullish stance on precious metals for the next 6 to 12 months, unaffected by the election outcome. Along these lines, Citi commodity strategists are mostly bullish on gold.

They forecast gold to reach $2,700 to $3,000 per ounce and silver to hit $38 per ounce. Investors willing to follow this advice should consider buying gold in the spot market on any pullback.

More importantly, the anticipation of a potential trade war escalation could lead investors to seek hedges against equity and currency risks, further supporting precious metals and gold amid global uncertainty. However, in the event of enacted tariffs, gold is expected to outperform broader commodities indices.

Buy Energy Stocks

Energy stocks are likely to gain from Trump’s policies. Following the failed assassination attempt, shares of banks, healthcare companies, prison operators and energy firms rallied in response to policies proposed by the former president, highlighting the relevance of Trump victory stocks.

Energy Select Sector SPDR Fund (NYSEARCA:XLE), the benchmark ETF for gauging the energy sector sentiment, is staging a breakout, which could take the price above the recent high of ~$98.00. Hence, this suggests an upside potential of about 7% from current levels.

The financial markets are reacting to the potential for looser regulations and explicit support for oil companies and fossil-fuel automakers, as outlined in Trump’s platform. This has spurred interest in sectors that are aligning as Trump victory stocks. As far as some other sectors are concerned, health insurers are expected to benefit from a regulatory environment that may become more relaxed.

Overall, the expectations are that U.S. equities will move higher as Trump will likely push for lower taxes and less regulation to support the business community.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.