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Peter Garnry
Chief Investment Strategist
Chief Investment Strategist
As the US elections approach, investors are seeking clarity on how potential outcomes will affect the markets. Whether it’s fiscal policies, trade, or sector-specific impacts, each candidate’s agenda could shape the financial landscape for years to come. Here, we answer some of the top questions investors are asking as they prepare their portfolios for this crucial event.
As the U.S. election draws near, both betting markets and polls offer valuable insights into which candidate is leading the race. Here’s how to track who is favored to win:
Combining insights from both betting odds and polling data provides a broader view of which candidate is favored, helping investors anticipate potential election outcomes.
Each candidate brings a distinct policy approach that could have varied effects on sectors and asset classes. Here’s a breakdown of their potential economic and financial agendas:
What Are the Most Positive and Negative Market Scenarios Following the Election?
US elections are historically linked to heightened market volatility. This year is no different, as investors weigh the implications of a potential change in leadership or continued policy direction. Volatility is often driven by uncertainty, and key areas like fiscal spending, trade policy, and foreign relations are at the heart of the debate.
The interaction between presidential elections and equity markets is complex. Generally it is expected that markets do well ahead of the elections as the incumbent president would do his best to prop up the economy to look good.
In How US elections have shaped market performance in modern history we took a look at market performance in US equities over the previous 13 elections since 1972. What we find is that there is no significant difference in compounded returns in election years compared to non-election years. Given the efficiency of financial markets that is also what you would expect.
What we did find was there is a weak claim to be made that a strong equity market going into the election favours the party controlling the White House. Another finding was that the one-year return in S&P 500 post-election is generally much higher for the Democratic Party, but again there was some great timing and luck in these results as the Democratic Party won the election prior to the three rebound years of 1976, 1996, and 2020.
Historically, markets often experience heightened volatility in the weeks following US elections as investors adjust to the outcome. However, over the long term, markets tend to stabilize and perform positively regardless of the winning party, driven by broader economic conditions rather than political changes alone.
Sectoral performance will vary widely depending on who wins the presidency. Here’s a quick breakdown of the potential winners:
The most significant market impact could come from a clean sweep by either party, allowing them to push through ambitious agendas. Here’s a look at key stocks to watch based on different election outcomes:
Yes, both currency markets and interest rates could see fluctuations. Markets tend to price in political outcomes ahead of time, but a surprise result could trigger sharp movements.
Regardless of the election outcome, certain investment principles such as those of diversification and long-term focus remain valuable in navigating market uncertainty. No matter the outcome, several trends are expected to continue or accelerate, providing key areas to explore:
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