On Thursday, the automotive sector experienced significant stock movements following the announcement of Donald Trump's presidential election victory. Shares of German automakers fell sharply, with BMW (ETR:BMWG) shares dropping by 6.6%, Mercedes by 6.4%, and Volkswagen (ETR:VOWG_p) by 4.3%. In contrast, American automakers saw their stocks rise, with General Motors (NYSE:GM) increasing by 2.5% and Ford (NYSE:F) by 5.6%.
Suppliers with exposure to the U.S. market also gained, as evidenced by American Axle (NYSE:AXL) & Manufacturing Holdings Inc. (AXL) climbing 5.4% and Dana Inc. (DAN) advancing 7.1%. However, suppliers more reliant on the European market did not fare as well, with Valeo SA (OTC:VLEEY) experiencing a 3.1% decline and Forvia dropping by 3.6%.
The most notable movement was seen in Tesla (NASDAQ:TSLA)'s shares, which surged by 15%. Analysts at RBC (TSX:RY) expressed confusion over the positive reactions of U.S. automakers and suppliers, considering the potential negative implications of tariffs and retaliatory measures that usually follow such political events.
The analyst from RBC reflected on the first Trump administration, noting that while tariff threats were a concern for the industry, particularly for suppliers with global exposure, they ultimately remained unimplemented. The firm suggested that many of the day's market movements might be knee-jerk reactions rather than responses based on the real implications of policy changes.
InvestingPro Insights
To provide additional context to the market movements discussed in the article, let's look at some recent data for American Axle & Manufacturing Holdings Inc. (AXL), one of the suppliers that saw gains following Trump's election victory.
According to InvestingPro data, AXL's market capitalization stands at $737.23 million, with a revenue of $6.25 billion for the last twelve months as of Q2 2024. The company has shown modest revenue growth of 4.37% over this period, which aligns with the positive market reaction described in the article.
InvestingPro Tips highlight that AXL has a high shareholder yield and is expected to be profitable this year, factors that could contribute to investor confidence. Additionally, the company's stock has seen a significant return over the last week, with a 9.73% price total return, echoing the 5.4% climb mentioned in the article.
It's worth noting that while AXL's performance seems positive, InvestingPro Tips also indicate that the stock price movements are quite volatile, which investors should consider when evaluating the company's long-term prospects in light of potential policy changes.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for AXL, providing a deeper understanding of the company's financial health and market position.
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