SLX: Big Winner In Trump Presidency

Election night was one of the wildest rides that investors have had since the Brexit vote back in June. The stunning decline in the Dow futures contracts on election night was topped only by the astonishing reversal it staged on Wednesday morning as folks began digesting the implications of a Trump presidency. Investors sent several sectors soaring that are perceived to benefit the most from a Trump presidency, such as financials and healthcare. One of the biggest gainers of the week, however, was a sector that many may not have even thought about - steel.

 

Steel producers, such as Rio Tinto (NYSE:RIO), Vale (NYSE:VALE) and Nucor (NYSE:NUE), have struggled mightily over the past several years as iron ore prices have plunged more than 70%, thanks to weakness in the manufacturing sector, particularly in China. The challenges of producing profitable steel have damaged many balance sheets and driven some of the smaller producers to the brink of bankruptcy. The steel market, however, has improved considerably in 2016 as iron ore prices have risen nearly 50%. The VanEck Vectors Steel ETF (NYSEARCA:SLX), the only pure play in the space, is up roughly 90%.

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