With trade tensions between the U.S. and China all over the news recently, markets are aflutter as investors wonder where to allocate funds to protect assets and potentially benefit from a lingering trade war.
After sources said Tuesday that the Trump administration would delay placing tariffs on auto imports for up to six months, according to CNBC, Mark Newton of Newton Advisors believes that there are two stocks that are positioned to benefit despite their involvement in global trade: Ford and U.S. Steel.
Newton feels Ford is poised for a potential move back up, after several years of slow decline and stagnation. Shares of Ford increased more than 1% in Wednesday’s trading session following the auto tariff delay announcement by Trump.
“I like the stock. I think that, really, any move over $12 would help to break this downtrend,” Newton about about Ford said Tuesday on CNBC’s “Trading Nation.” “Who knows what will happen, but a potential delay in the tariffs very well could lead these auto stocks back higher.”
Newton also feels steel stocks should benefit from a trade war, as tariffs will encourage domestic investment, and this will benefit any U.S. based steel company such as U.S. Steel.
“The steel stocks … have been beaten up very badly in recent years,” Newton said. “U.S. Steel traded back as high as $47 only last March and is down over 60% since that time. So, in my opinion, it’s more of a case of sell the rumor and buy the news, and these stocks have pulled back to levels that I think are increasingly very important.”
“My thinking is it’s attractive from a risk-reward perspective,” he said. “This looks really interesting at a time when everybody’s searching for tech stocks, and that sector’s been increasingly volatile, and here’s a stock that’s down over 60% that looks increasingly like this could be a winner.”
Investors looking for ETFs that contain holdings of U.S. Steel might consider the SPDR S&P Metals & Mining ETF (XME) or the VanEck Vectors Steel ETF (SLX), both of which has significant U.S. Steel exposure. Investors looking for ETFs that contain holdings of Ford could look into WBI Power Factor High Dividend ETF (WBIY) or First Trust Nasdaq Transportation ETF (FTXR).