So you may have heard about Donald Trump and the trade war that was over but now…isn’t. The markets (mainly the US) had clearly priced in a successful conclusion to the China-American trade ‘cold war’ that has been simmering for over a year now. The announcement that Trump intends to resume hostilities has made Wall Street sneeze and, as they say, the ASX may catch a cold.
Stocks that are likely to be affected the most if this global uncertainty continues are exporters (our main exporting destination is China and the market doesn’t want to know). So if you are sick of the President of another country influencing your investments, here are two stocks that should be unaffected by the trade war (and might even benefit).
Wesfarmers Ltd (ASX: WES)
In uncertain times, diversity is your friend, and Wesfarmers remains one of the most diversified companies on the ASX in my opinion. Wesfarmers owns a staggering variety of successful businesses, including hardware chain Bunnings, retail giants Target, Officeworks and Kmart, and WestCEF – a chemicals, energy and fertiliser conglomerate. It also retains a chunk of the newly spun-off supermarket giant Coles Group Ltd (ASX: COL). Wesfarmers have interests in dozens of other ventures, but they are too numerous to list. Its most recent interest is Kidman Resources Ltd (ASX: KDR), a lithium company. I think Wesfarmers has proven that it is a company that knows how to run businesses of all colours effectively and is an excellent, diversified hedge against global uncertainty and currency volatility.
Newcrest Mining Ltd. (ASX: NCM)
The one asset that thrives on fear is gold. Investors flock to the yellow metal when other growth assets like US stocks start to look shaky. The last time that the US was threatening increased tariffs on Chinese exports (November last year), the gold price per ounce rose from around US $1,200 an ounce to over US $1,340 in the space of three months. In my opinion, if the most recent ructions between Presidents Xi and Trump last for longer than a few days, this will light a fire under the gold price once again. The biggest beneficiaries of this would be gold miners like Newcrest. Following the gold price last year, Newcrest shares rose from around $20 to over $26 and today are hovering at the $24.70 mark. If trade tensions continue, Newcrest is one share I would be very comfortable owning.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.