Plenty of sector and industry ETFs are reacting positively to Donald Trump’s surprise victory in the U.S. presidential election earlier this month.
The VanEck Vectors Steel ETF (NYSEArca: SLX) is one of those ETFs and there is a credible chance SLX can keep building on its recent gains that have seen the steel fund gain more than 13% this month.
Steel has been strengthening this year on policy changes. Since the start of March, U.S. steel has gained ground after Congress passed a new customs and trade enforcement bill allowing the Obama administration to take action against Chinese dumping. The Department of Commerce imposed a 265.79% tariff on Chinese steel.
During the campaign, Trump proposed significant infrastructure spending as an avenue for boosting the U.S. economy. If those plans see the light of day, SLX and steel stocks could benefit.
“Industrial metals stocks have soared following Donald Trump’s presidential win, apparently due to the belief that his administration will increase infrastructure spending in the U.S. and further tamp down on China-produced steel,” reports CNBC. “AK Steel, U.S. Steel and Century Aluminum are all up over 30 percent since the election, and some say these names are poised for further upside.”
Those stocks are members of SLX’s lineup.
The American Society of Civil Engineers calculated that the U.S. will fall $1.44 trillion short of the $3.32 trillion required to inves tin infrastructure through 2025.
According to Trump’s book, “Crippled America: How to Make America Great Again,” he has called for a “trillion-dollar rebuilding program” that will be “one of the biggest projects this country has ever undertaken.”
While the federal government goes through the political throes, states and cities seem to be ahead of the curve, spending billions of on infrastructure projects. The recent spending is still only a drop to what is needed, but municipal officials who have hesitated to borrow are beginning to loosen their purse strings.
“Trump has proposed a $1 trillion infrastructure plan; if implemented, that could be expected to lead in additional demand for steel, obviously an important component in many infrastructure products. Meanwhile, his proposal to reduce imports of Chinese products could be good news for domestic steel producers,” according to CNBC.
VanEck Vectors Steel ETF (NYSEArca: SLX)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.