- The US election has significant potential to impact markets. A Harris victory would mean more of the same, but a Trump victory could lead to uncertainty particularly around trade.
- Historically, shares have performed better under Democrat than Republican presidents with the best outcome being a Democrat president and Republican House and/or Senate.
As of November 12, 2024, the United States has concluded its presidential and congressional elections, resulting in significant political shifts.
Presidential Election Results
Former President Donald Trump has been elected as the 47th President of the United States, defeating Vice President Kamala Harris. Trump secured key battleground states, including Georgia, Pennsylvania, and Wisconsin, surpassing the required 270 electoral votes
Congressional Election Outcomes
- Senate: The Republican Party has regained control of the Senate, achieving at least 52 seats.
- House of Representatives: The House remains under Republican control, with the party securing a majority of seats.
Market Reactions
Following the election results, U.S. stock markets experienced a surge, with the S&P 500 futures rising by 2.3% in pre-market trading. The U.S. dollar strengthened against a basket of currencies, and yields on the 10-year U.S. Treasury increased to 4.43%.
Anticipated Policy Directions
The incoming administration is expected to implement policies focusing on:
- Taxation: Maintaining the corporate tax rate at 21%, with potential reductions to 15%, aiming to boost corporate earnings.
- Trade: Introducing tariffs, including a proposed 20% universal tariff on imports and a 60% tariff on goods from China, which may impact global trade dynamics.
- Immigration: Enforcing stricter immigration policies, potentially affecting labour markets and industries reliant on low-cost labour.
- Energy: Reducing regulations on fossil fuels and revising environmental policies, which could influence the energy sector and environmental standards
Investment Considerations
Investors are advised to monitor these developments closely, as the anticipated policy changes may lead to market volatility. Sectors such as energy, financial services, and healthcare could experience significant impacts. Maintaining a diversified portfolio and consulting with financial advisors is recommended to navigate the evolving economic landscape.
United States
- Equities: U.S. stock markets surged, with the S&P 500 and Nasdaq Composite indices each rising approximately 2% in the days following the election.
- Currency and Bonds: The U.S. dollar strengthened, achieving its most significant gain in two years, while yields on 10-year U.S. Treasuries increased to 4.43%.
Asia
- Japan: The Nikkei 225 index rose by 1.9%, benefiting from a weaker yen against the dollar.
- Hong Kong: The Hang Seng index declined by 2.2%, reflecting investor concerns over potential trade policy changes.
Europe
- Equities: European stocks experienced mixed reactions; while some markets advanced, others faced declines due to apprehensions about future U.S. trade policies.
- Currencies: The euro and British pound weakened against the U.S. dollar amid uncertainties regarding transatlantic trade relations.
Commodities
- Oil: Oil prices experienced volatility, with initial gains driven by expectations of deregulation under the new administration, followed by concerns over potential trade disputes affecting global demand.
- Gold: Gold prices fluctuated as investors weighed the prospects of inflationary policies against the strengthening dollar.
Cryptocurrencies
- Bitcoin: Bitcoin reached a record high, bolstered by Trump’s favorable stance on cryptocurrencies compared to Vice President Kamala Harris.
Overall, global markets are adjusting to the anticipated policy shifts under the incoming administration, with sectors such as energy, financial services, and technology experiencing notable movements. Investors are advised to monitor these developments closely, as the evolving political landscape may lead to further market volatility.
