Today marks the start of a crucial week for financial markets, with the U.S. presidential elections scheduled for Tuesday, November 5. Expectations are high, and consequently, there could be significant market volatility. What are the most likely scenarios?
TRUMP VICTORY
In the case of a Trump victory, an economic policy focused on tax reduction paired with the introduction of import tariffs is anticipated. This approach could support inflation and, consequently, strengthen the U.S. Dollar. The Oil and Gas sector could also benefit. Market operators might focus on stocks such as Chevron, Exxon, Rheinetall, Kongsberg, and Fluor Corp. Bitcoin might also appreciate, and bond yields could rise, although these have already increased in recent weeks due to the possibility of a Republican victory.
HARRIS VICTORY
The Democratic candidate has indicated potential increases in both corporate and capital gains taxes, which could negatively impact the stock market in the short term. In this case, operators might focus on stocks such as First Solar, Enphase, Schneider Electric, and Honeywell International.
A Trump victory could thus have the most significant impact, as it would represent a considerable change from the current Biden administration, moving from a Democratic to a Republican presidency, with Trump’s approach potentially amplifying this shift.
Additionally, November 7 marks an expected Federal Reserve meeting, where interest rates are anticipated to be cut by 25 bps.
Given this context, we can consider the current week as "high-risk" for market operators, suggesting that minimizing exposure and refraining from new trades might be advisable until the political situation in the U.S. becomes more defined, as it could significantly impact market movements.
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