Investors Should Brace for Market Volatility Post US Election

Highlights:

Election Uncertainty: The tight race in the upcoming US election could lead to significant market volatility, with both parties potentially claiming victory, resulting in legal battles and protests.

Potential Policy Shifts: Depending on the election outcome, investors may face changes in corporate tax rates, energy policies, and regulatory oversight, impacting various sectors.

Market Turbulence: The period between the election and the inauguration is expected to be particularly tumultuous, with significant market swings as political developments unfold.

The period between the outcome of the US election and the presidential inauguration is anticipated to be a volatile time for financial markets, according to Capital Group political economist Matt Miller. As the November 5th election draws near, the uncertainty surrounding the results and their implications is causing concern among investors.

Uncertain Election Outcome

Miller, during a recent webinar, highlighted that the election could be extremely close, essentially coming down to a "coin toss." This tight race could lead to both parties claiming victory, leading to potential legal battles and protests. The period between the election and the inauguration on January 20th, therefore, could be marked by significant market fluctuations as investors react to the unfolding political drama.

Structural Frustrations and Potential Protests

Miller emphasized the frustration within the center-left in the US political system regarding structural barriers such as the Electoral College and Senate representation. These factors could fuel further unrest, particularly if the election result is contested. The possibility of persistent protests looms large, especially if there is a perception of an unfair outcome.

Market Implications

The two most likely scenarios outlined by Miller include either a divided government with a Democratic president and a Republican-controlled Senate or a Republican sweep with Trump returning to power. Both outcomes would have significant implications for tax policy, regulatory measures, and international relations. Investors should prepare for potential increases in corporate taxes, shifts in energy policy, and changes in regulatory oversight depending on the election's outcome.

Conclusion

As the US election approaches, investors should brace for a turbulent period marked by uncertainty and potential market swings. The next few months could be critical for market positioning, with the election's outcome and the subsequent political developments likely to have lasting impacts on the global economy.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com