If Donald Trump wins the presidential electioninvestors could expect strong reactions in specific sectors. In general, his re-election could generate volatility in the sectors of theenergyfrom the defense and of cryptocurrencieswhich could experience potential growth, while the technology and clean energy sectors could face more difficulties. Investors should therefore be ready for one market rotationespecially in sectors sensitive to trade and regulated in the environmental field. He underlines it Freedom24 that he developed a strategic analysis to identify the sectors that could offer interesting opportunities as the electoral date that the new American administration will decide approaches.
US elections, Trump or Harris
In case of Kamala Harris victory on Nov. 5, his policies would likely focus on clean energy, regulatory oversight and economic support for the housing and cannabis industries. With a Democratic administration, the market could respond positively to growth sectors such as technology and renewable energy, positioning the Harris administration as a potential enabler of long-term infrastructure and of initiatives to support green.
Regardless of the electoral outcome, the months of November and December – the Freedom24 analysts further explain – could experience a marked volatility already before the November 5th meeting, when investors will adjust their portfolios based on the presumed winner of the elections.
Both scenarios offer opportunities for sector strategies; However, investors will need to carefully monitor political changes and maintain flexibility in their portfolio choices in anticipation a more defined political landscape towards 2025.
What will the global economic impacts be?
Still on the topic of the American elections Peter Garnry, Head of Equity Strategy of BG SAXO (Saxo Bank) highlights how the eUS presidential and congressional lectures on November 5, of course, they will influence the direction of the global economy for months and even years because the US economy is still the largest in the world and its stock market dominates all other markets with 65% of the total value of global shares.
If Trump winsTrump’s “America First” approach could lead to greater friction with China and less support for Ukraine, which could cause big geopolitical uncertainty in Europe. It could also lead to labor shortages, thus higher wages, more inflation and a disruption to global supply chains with the semiconductor industry at greatest risk. US SMEs and potentially economic growth, the gold market and banks would be favored.
If there was a stalemate if Harris wins but the Senate is against, it would mean that Harris’ goals regarding healthcare reform and tax increases would not pass, and that the status quo on China would be maintained. On an economic level, this scenario is potentially the worst for growth: A negative fiscal impulse would slow the economy in 2025 leading to a recession risk.
In the end if Harris winsat the policy level would focus on healthcare; economic growth and housing issues; climate change and clean energy. Many of Harris’ policies could lead to a increase in inflation. Pharmaceutical companies would be the big losers in this scenario, and higher corporate tax rates would reduce their earnings in the short term. However, incentives for construction companies could start the process job creation and increase family formation, thus stimulating growth in related spending. The obvious impact on the market is a clean energy stocks rally. Emerging markets and European stocks could react positively.
America First vs continuity
Xiao Cui, Senior Economist at Pictet Wealth Management observes that a few days before Election Day, the two candidates remain in a situation of apparent equality. We continue to believe that a Kamala Harris victory could lead to a divided government, thanks to the advantage of the Republicans in the Senate. In the event of Donald Trump’s victory, however, a Republican victory in Congress is more likely than a divided government, due to a very close race in the House.
A victory for the Republican Party would encourage reflation trade policies, desired by the “America First” rhetoric, with tax cuts and increased spending. A Trump victory with a divided government would instead imply a trade war 2.0 with a potential downside to growth not offset by fiscal stimulus. In contrast, a Harris victory in a divided government would result in continuity with the outgoing administration, while a Democratic Party victory would lead to increased taxes on businesses and high-income families, but also increased spending welfare.
Trump’s policies on taxation, trade and immigration “should be more inflationary than those proposed by Harris. We expect increased macroeconomic uncertainty and a more aggressive stance on trade, with higher tariffs and limited labor supply.”
A positive moderation of the labor market and a soft landing of the economy “remain our baseline scenarioand, with the Federal Reserve decreasing rates to neutrality, around 3-3.25%, in 2025. However, a Trump presidency could trigger a more aggressive monetary policy and a revaluation of the final rate of the cutting cycle,” concludes the expert.
