The electoral period in the United States perennially gives rise to heightened speculation and anticipation within financial markets. In this context, strategists from TD Securities and Commerzbank are diligently examining the intricate dynamics that may unfold, seeking to decipher the potential impacts of the upcoming presidential elections on both market dynamics and the broader economy.
According to the insights provided by TD Securities strategists, the prevailing baseline scenario paints a picture where Donald Trump emerges victorious in the 2024 presidential elections, positioning himself for a rematch against the incumbent President Joe Biden.
In tandem, there is an anticipation that Republicans will regain control of the Senate, while Democrats may manage to secure the House of Representatives, albeit with a narrow margin.
The strategists delineate a comprehensive set of focus areas that will capture the attention of the markets. These encompass taxes, economic growth, deficits, regulations, geopolitical implications, and trade-related matters.
In the event of a Trump victory with a divided Congress, an expected uptick in term premiums is foreseen, potentially acting as a stimulant for stock markets. This prognosis is contingent upon the assumption that corporate taxes will remain at a low level, as articulated in their detailed report.
Simultaneously, Commerzbank underlines the significant likelihood of Donald Trump securing a second term, urging future policymakers to be prepared for such an outcome. The financial institution's analysts highlight several key areas that could undergo transformations under Trump's leadership.
Under the potential helm of Trump's administration, which may differ somewhat from the preceding one, Americans might exhibit a diminished inclination to support Ukraine to the same extent as before. This, in turn, could compel European nations to shoulder a greater responsibility, both in terms of security and defense.
Notably, Trump's past inclination towards a resolute trade policy based on tariffs is brought into focus. According to the strategists, such a stance could potentially lead to a resurgence of trade disputes between the United States and the European Union.
In summary, a protectionist stance towards foreign trade, as alluded to by Trump's earlier policies, may set in motion shifts in global economic relations.
It is essential to underscore that the current political and economic landscape is inherently dynamic, with elections serving as potential catalysts for introducing new variables. Consequently, investors meticulously tracking the unfolding political scenario in the United States must remain poised to adapt their strategies in response to any discernible changes.
28.01.2024
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