Markets are expected to remain turbulent due to investors’ concerns over the consequences of President Donald Trump’s protectionist trade policies, China’s plan to put sanctions on America and the impending U.S. sanctions on Iranian oil. However, instead of staying away from the stock market, betting on stocks that have been faring well despite these concerns could be a wise decision.
The S&P 400 Mid-Cap index has marginally outperformed the S&P 500 since discussions related to the trade policy started six months back. This indicates that investors preferred mid-cap stocks over others during this period.
Moreover, evaluating the historical performance of mid-cap stocks against large-cap and small-cap ones, it can be seen that the former cohort has generated the best risk-adjusted returns.
Before we present a few top-ranked mid-cap stocks, let’s take a look at what might keep the market’s performance subdued in the quarters ahead.
No Immediate Solution to U.S.-China Trade War
The Trump administration’s business policies have no place for China’s strategy of eliminating business competition for its own companies within its boundaries but to enter foreign markets for grabbing external business. The ongoing trade war is a result of Washington’s intolerance to these unfair trade practices.
The trade conflict, which started on Jul 6 with both nations slapping 25% tariffs on $34 billion worth of each other’s goods, has witnessed $50 billion worth of goods under tariff fire to date. Another $200 billion worth of Chinese products await levies to be put in place.
Trump is considering taxes on $267 billion worth of more goods, which would bring practically every Chinese export to the U.S. under the tariff blanket. The trade war has already affected U.S. agriculture, food, energy, auto, and technology sectors among others, and some large-cap stocks exposed to the Chinese markets, taking a hit.
