In-person voting is now underway for the 2024 US Presidential Elections.To manage expectations right from the onset, it could be days, perhaps even weeks, before we discover whether Kamala Harris or Donald Trump has become the next President of the United States.As the world waits to find out who will next occupy the White House, and with markets mostly at a standstill in the interim, here’s a quick check list of crucial markers to look out for along the way:
Why are the US presidential elections so important for markets?The 2024 presidential elections will determine whether Harris or Trump will be the leader of the world’s largest economy over the next 4 years.These two presidential candidates have vastly different views on how the US economy should be run, with contrasting policies from taxation to the environment, and even how America interacts with the rest of the world.
With so much at stake, the policies of the next POTUS are bound to affect the values of stocks, FX, commodities, and even cryptocurrencies worldwide.
Which candidate do markets think will win?
Donald Trump has been favoured by certain segments of the global financial markets.
The likes of the US dollar, Bitcoin, and even US oil and banking stocks have risen as part of the so-called” Trump trade” in recent months.
To be clear, a Trump win is far from certain.Leading up to the November 5th voting day (today), national polls still point to a neck-and-neck race between Harris and Trump.
It’s still too close to call, with the final official result perhaps days or weeks away.
While bracing for any incoming volatility, perhaps any delays could buy market participants more time to furnish up their trading/investment strategies for the days, and even years ahead, with these 4 potential scenarios as a rough guide:
Scenario 1: Trump Wins – potential boost for US Dollar, RUS2000 stock index, and BitcoinHere’s why:
Such measures could reignite US inflation, to the point of perhaps slowing the pace of Fed rate cuts.
This means the dollar may gain value against other currencies, creating short-term opportunities for FX traders.
Even the likes of Exxon (oil), JPMorgan (financials), and MicroStrategy (cryptos) have already posted their respective record highs in October amidst the “Trump trade”.
Scenario 2: Harris Wins – potential relief for currencies and stock indexes of major US trading partners (Europe, China, Mexico, etc.)Here’s why:
Overall, Harris offers “policy continuity” from her predecessor President Joe Biden.
A Harris win could also trigger the swift unwinding of the above-mentioned “Trump trades”, i.e. sudden drops for the US dollar, Bitcoin, and the RUS2000 index.
Scenario 3: Split Congress – “Business as usual” for rising risk assets (e.g. US stocks)
If the election results in a split Congress, where neither party has full control, expect some interesting impacts:
Scenario 4: Contested Election Results – Safe havens up, risk assets down?Already there are concerns that the outcome is bound to be decided in the courts, with fears that violence might even break out among disgruntled voters.If such a scenario materialises and heightens market fears:
Stocks, cryptos may tumble: Riskier investments like global stocks and cryptocurrencies might fall until calm is restored.
Gold, USD could rise: Gold, the US dollar, and other safe-haven assets may rise as investors seek security during such uncertain times.
Key Takeaways: How to PrepareNo matter who wins, the US election will likely bring both opportunities and risks.Here are some strategies to help you navigate this period:
Final ThoughtsThe 2024 US Presidential Election could reshape financial markets in many ways, both for the immediate term, as well as for the coming years.
A win for Trump or Harris, a split Congress, or a contested result – each comes with its own set of market implications.
By staying informed and having a clear investment and trading strategy, you can navigate this period of uncertainty and make the most of potential opportunities.More By This Author:This Week: Volatility Ahead With US Elections And Fed Rate Decision In Focus Next Week: Big Tech Earnings And Vital US Macroeconomic Readings BRN Heading Towards Weekly Gain?
