Despite Wall Street plunging, US investors sent gun stocks soaring after Barack Obama's re-election. Photo: Reuters
The re-election of Barack Obama sparked a heavy sell-off on global sharemarkets, but there was one beacon of hope for investors - guns.
As investors headed for the exits on concerns that the US could be plunged back into recession if politicians can't find a way to repair the national budget, the stock prices of gunmakers soared on Wall Street.
While the overall market was down more than 2 per cent, shares in Smith & Wesson shot up 7.7 per cent. Sturm, Ruger & Co, which bills itself as the only full-line manufacturer of American-made firearms, jumped 5.4 per cent, while stocks in Cabela's, a gun retailer, added 1.54 per cent.
Australian stocks have joined the global sell-off today. In early trade, the benchmark ASX200 was down more than 1 per cent, while the Aussie dollar had dived from close to $US1.047 late yesterday afternoon to $US1.04.
During the second presidential debate last month, Obama appeared to endorse a push for a ban on assault weapons if he were to win a second term.
Firearm sales have grown at 10 per cent annually since Obama's election in 2008, compared with a 7 per cent rate from 2001 to 2007, according to Benchmark Co.
The politically powerful National Rifle Association had backed defeated Republican challenger Mitt Romney, warning that an Obama second term would be the "biggest threat" to the rights of gun owners.
"He wants to bring back the 1994 semi-auto ban; his administration has already imposed an illegal registration scheme on certain rifle sales," the NRA said in a statement in mid-October.
"There is no way to know how far he would go to use his executive powers to curb our rights if he didn't have to face re-election," the NRA said.
Wedbush Securities analyst Rommel Dionisio, who covers the gunmakers, said the administration "has not really lifted a finger in the last four years to tighten gun control legislation".
"There is a consumer fear that Obama will tighten gun control legislation, but whether or not they will do it this time I don't know," Dionisio said.
Guns up, banks down
While shares in gunmakers rose, Wall Street banks slumped on fears of tougher regulation during Obama's second term.
Shares of Goldman Sachs Group, JPMorgan Chase & Co and Citigroup dropped 5 per cent, Bank of America lost 6 per cent and Morgan Stanley fell 7 per cent in midday trading on Wednesday.
Obama lost the support of many bankers in the aftermath of the 2008 financial crisis and the passage of the 2010 Dodd-Frank financial reform law, which sought to shore up the financial system but also cost banks billions of dollars in annual profit.
BusinessDay with agencies