Operators of private prisons are soaring on the stock market because analysts expect Donald Trump to row back on the Department of Justice’s ruling this summer to phase out privately run institutions’ housing of federal inmates.
Sally Yates, the deputy attorney general, said independent inspectors had found that private prisons “compare poorly to our own bureau facilities” and did not save substantially on costs. The companies are also likely to benefit from Trump’s plan for the mass deportation of immigrants.
Analysts at Height Securities said: “Private prisons would likely be a clear winner under Trump, as his administration will probably rescind the DoJ’s contract phase-out and ICE [Immigration and Customs Enforcement] capacity to house detainees will come under further stress.”
Shares in Corrections of America, the biggest private prison operator, surged by 60% in early trading on Wednesday before ending the day 40% higher. The shares were down 2% on Thursday. Shares in Geo Group, the second biggest private prison company, jumped 16% on Wednesday and were flat on Thursday.
During her campaign, Hillary Clinton repeatedly attacked drug companies for “outrageous price gouging”, in which companies buy old drugs and ramp up the price, and pledged to take on the industry if elected.
She promised her crackdown during the furore surrounding Martin Shkreli, the pharmaceutical boss described as “the world’s most hated man”, who raised the price of a life-saving Aids drug from $13.50 to $750 per pill. She also attacked the EpiPen company, Mylan, which increased the price of the life-saving allergy treatment by sixfold, as the “latest troubling example of a company taking advantage of its consumers”.
Clinton’s policy on drug pricing was mostly a reaction to the success of rival Bernie Sanders’ popular message.
Shares in Pfizer, the world’s biggest drugmaker, have risen by 10% since the result of the election became clear. The SPDR S&P Biotech exchange-traded fund jumped 10.4%.
But hospital stocks were hit by Trump’s vow to repeal the Affordable Care Act, which has given healthcare access to America’s poorest and previously uninsured people. Shares in hospital groups Centene, HCA Holdings and Universal Health Services were some of the biggest losers on the stock market, as they could once again face treating millions of uninsured patients.
Trump has pledged to make America energy independent, tear up red tape and allow oil and gas exploration in new areas of the country. Oil and gas company shares were among the biggest risers on Wall Street on Wednesday and Thursday.
The president-elect has also pledged to allow a fresh application for the Keystone XL oil pipeline. President Barack Obama rejected the Canada-US pipeline in 2015, but Trump has said he would invite a fresh proposal from TransCanada, the company behind the plan.
Trump has also vowed to withdraw the US from the Paris climate accord, and wants to halt the “billions and billion and billions” given to UN climate programmes and clean energy development. This caused shares in Vestas, the Danish wind turbine company, to fall by 14% on Wednesday before recovering to 6.6% lower. Solar power companies also tumbled.
Infrastructure, construction and commodity companies
Trump has vowed to kickstart a massive infrastructure spending programme, designed to fix the country’s crumbling roads and buildings and also increase jobs and spending. “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” he said in his acceptance speech.
The prospect of all that work has helped shares in companies supplying the construction sector with materials and kit. Caterpillar, the construction equipment company, rose 7% on Wednesday and the shares were trading higher on Thursday. Shares in the mining and commodities trading company Glencore rose 6% and BHP Billiton jumped more than 4% on Wednesday as Trump’s poll victory was confirmed. Shares in US Steel Corp soared 17% on Wednesday and were up again on Thursday.
Trump has pledged to increase US defence spending, and he plans to force other Nato countries to spend more on it too. During his campaign for the White House, he threatened to abandon US allies in Europe if they did not spend enough on defence.
Now Trump has won the election, investors expect more spending on defence and so shares in arms makers and other defence-related stocks have benefited.
London-listed BAE Systems gained almost 7% on Wednesday and a further 4.6% on Thursday. On Wall Street, shares in Lockheed Martin rose 6% on Wednesday and were up again on Thursday.
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