US Elections 2024 Market Outlook: Potential Effects on Stocks, Commodities, Cryptocurrencies, and Beyond
Key Takeaways
– The 2024 US Presidential Election is expected to have a substantial impact on various markets, including stocks, commodities, cryptocurrencies, and the US dollar.
– A Trump victory could boost US stocks and cryptocurrencies but may result in a weaker dollar and increased volatility in gold prices.
– A Harris victory could stabilize markets in the long run, especially benefiting sectors like renewables, though it might initially introduce market uncertainty and place regulatory pressure on cryptocurrencies.
The 2024 US Presidential Election is shaping up to be one of the most significant in recent history, with potential ripple effects across global markets. This article explores the likely outcomes of the election and their potential impact on key financial markets, including stocks, commodities, cryptocurrencies, and the US dollar.
The US Election So Far
The 2024 election has been defined by heated debates, fluctuating polls, and heightened tensions, including assassination attempts on Donald Trump, which have added an element of uncertainty to the race. The debates have underscored the stark contrasts between the candidates’ policies and visions for the country. Polls have shown significant volatility, reflecting a tight race between Harris and Trump. Recent surveys suggest a nearly even split, with slight variations depending on the state and demographic being polled.
A Look at the Most Probable Scenarios
The outcome of the 2024 US Presidential Election largely hinges on key battleground states, making it one of the most unpredictable races in recent history. Current projections suggest a tight contest with multiple possible outcomes. Here are the three most likely scenarios:
Scenario 1: Trump Clean Sweep
In this scenario, Donald Trump wins the presidency, and the Republicans secure control of both the Senate and the House of Representatives. This would provide Trump with the legislative backing to implement his policy agenda with few obstacles. Key initiatives may include further tax cuts, deregulation, and a hardline approach to immigration. The markets could react positively to this outcome, with reduced corporate taxes and deregulation potentially boosting US stocks and major indices.
Scenario 2: Trump Constrained
Here, Trump wins the presidency, but Congress is divided, with Democrats controlling the Senate and Republicans holding the House. This would lead to a more constrained administration, with Trump facing significant legislative hurdles. While tax cuts and deregulation would still be priorities, passing major legislation would be more difficult. Market volatility could increase due to the potential for gridlock, although Trump’s executive actions in sectors like energy and finance may still influence market dynamics.
Scenario 3: President Harris
In this scenario, Kamala Harris wins the presidency, but Congress remains split, with Democrats holding the Senate and Republicans controlling the House. Harris would face significant challenges in advancing her legislative agenda, which includes climate policies, social reforms, and increased regulation. Initially, markets might react cautiously, with concerns over tax hikes and stricter regulations causing US stocks to flatline. However, sectors like renewables and clean energy could benefit from Harris’ policies, potentially leading to long-term growth in these areas.
Harris vs. Trump: Two Vastly Different Agendas
Kamala Harris and Donald Trump offer sharply contrasting visions for the future of the U.S. Harris prioritizes climate action, social justice, and regulatory reform, with a focus on addressing environmental and social inequalities. Her policies could attract investment in green technologies and socially responsible businesses. On the other hand, Trump emphasizes deregulation, tax cuts, and stringent immigration policies, aiming to stimulate economic growth and national security. While his approach may boost corporate profits and market confidence, it could raise concerns about sustainability and social equity.
What May Sway Voters
Key issues influencing voter decisions include economic performance, healthcare, immigration, and climate change. Additionally, recent events such as assassination attempts, escalating conflicts in Europe and the Middle East, and the latest debates have heightened voter engagement, potentially swaying undecided voters.
Projected Market Impact
US Indices & Stocks
– Trump Victory: A Trump win could lead to a significant boost in U.S. stocks and major indices. His administration’s policies, including corporate tax cuts, deregulation, and efforts to reduce lending rates, are designed to stimulate economic growth and corporate profitability. Sectors such as energy, telecommunications, and utilities are likely to benefit from these policies. The energy sector could see increased investment and fewer regulatory hurdles, while telecommunications and utilities may grow due to favorable regulatory changes and lower operational costs.
– Harris Victory: A Harris win may initially cause US stock markets to stagnate due to concerns over potential tax hikes and increased regulation. Investors might be cautious about the short-term impact on profitability and market performance. However, over time, markets could welcome the stability and predictability her administration might bring. Sectors like renewables and clean energy could benefit significantly from her policies, driving substantial investment into green energy projects and innovation. Companies involved in clean technologies and infrastructure development may see increased demand and regulatory support, leading to long-term growth.
Cryptocurrencies
Trump Presidency: A Trump administration could be highly beneficial for cryptocurrencies due to its pro-crypto policies and focus on deregulation. By fostering a more favorable regulatory environment, these policies would reduce barriers for crypto businesses and investors, driving broader adoption and innovation. Confidence in the market would likely increase, pushing up cryptocurrency prices. Furthermore, reduced regulatory burdens might attract institutional investments, as large financial entities seek opportunities in the less restrictive crypto space. This influx of capital could stabilize and legitimize the market, leading to sustained growth and greater mainstream acceptance.
Harris Presidency: A Harris administration may introduce stricter regulations on major cryptocurrencies like Bitcoin and Ethereum, leading to significant effects across the broader market. These regulations could aim to enhance transparency, reduce fraud, and protect investors, potentially stabilizing the market for major cryptocurrencies. However, altcoins, which tend to operate with less oversight, could face significant challenges complying with new regulations. This increased scrutiny might reduce investor confidence in altcoins, resulting in lower trading volumes and steep price declines. The focus on regulating larger cryptocurrencies may also divert attention from emerging projects, further hindering altcoin performance.
Gold
Trump Win: A Trump victory could introduce significant volatility for gold prices. His pro-business policies, including tax cuts and deregulation, might boost stock markets and corporate profits, potentially reducing demand for gold as a safe-haven asset. However, global uncertainties—such as geopolitical tensions, trade disputes, and economic instability—could still drive demand for gold despite strong equity markets. This could result in gold prices dipping during times of market optimism but rising quickly when risks reemerge or markets correct.
Harris Win: Under a Harris administration, gold prices are likely to rise due to several factors. Increased government spending on infrastructure, social programs, and green initiatives could lead to fiscal stimulus, raising inflation concerns. As inflation rises, investors tend to turn to gold as a hedge against the devaluation of fiat currencies. Additionally, regulatory changes aimed at improving transparency and accountability in financial markets may create uncertainty, boosting demand for gold as a stable investment. Global economic instability and geopolitical tensions could further heighten this demand, solidifying gold’s role as a safe-haven asset.
US Dollar
Trump Victory: A Trump win may lead to a weakening of the US dollar, driven by his administration’s protectionist policies. Increased tariffs on imported goods could raise costs for businesses and consumers, slowing economic growth and reducing the dollar’s appeal. Additionally, Trump’s push for lower interest rates to stimulate investment could make the dollar less attractive to foreign investors. Lower interest rates typically result in reduced returns on dollar-denominated assets, contributing to the dollar’s depreciation in global markets. This weakening could impact international trade and reduce the purchasing power of American consumers.
Harris Victory: A Harris presidency could also weaken the US dollar, primarily due to increased government spending on infrastructure, healthcare, and social programs, which would raise the national debt. Concerns over rising debt levels and inflation could prompt investors to seek safer assets, further devaluing the dollar. Additionally, regulatory changes aimed at increasing oversight in various industries might create uncertainty in markets, dampening investor confidence in the currency. As businesses adjust to new regulatory environments and investors weigh the impacts, market caution could contribute to a depreciation of the dollar on the global stage.
Oil
Trump Presidency: Under a Trump administration, oil prices could rise significantly due to stricter sanctions and heightened geopolitical tensions. Sanctions on countries like Iran, Russia, and Venezuela would likely curtail their oil exports, tightening global supply and driving prices higher. These sanctions would be part of Trump’s broader strategy to exert economic pressure on these nations, leading to potential disruptions in the global oil market. Furthermore, the Middle East—already a volatile region—could face increased instability, exacerbating supply concerns. While Trump may push to boost US oil production through deregulation and support for the fossil fuel industry, these measures might not be sufficient to counterbalance the global supply constraints caused by sanctions and geopolitical risks. This mix of reduced foreign oil supply and regional tensions could result in sustained higher oil prices, affecting transportation costs and inflation.
Harris Presidency: Under a Harris administration, crude and Brent oil prices may decline due to her focus on climate policies and renewable energy transition. Her administration would likely prioritize reducing reliance on fossil fuels, lowering demand for oil and exerting downward pressure on prices. Regulatory changes aimed at cutting carbon emissions and promoting environmental sustainability could also impose stricter standards on the oil industry, such as limits on drilling and higher compliance costs. As oil companies face increased operational restrictions, their production and profitability may be negatively impacted. The market might anticipate these shifts, further driving down oil prices as the world transitions to cleaner energy alternatives.
The Bottom Line
The 2024 US Presidential Election is one of the most contentious and closely watched in history, with profound implications for global markets. November 5, 2024, will mark a pivotal moment, and investors should brace for increased volatility and be prepared for policy changes that may affect their portfolios. Whether investing in stocks, commodities, or cryptocurrencies, the election outcome will significantly shape market dynamics in the coming years.
Stay Ahead of the US Elections with WM
At WM Markets, we are dedicated to equipping traders with the tools and knowledge they need to navigate the complexities of the 2024 US Presidential Election. Our comprehensive US Elections Educational Campaign will help you prepare for various outcomes and capitalize on emerging opportunities. Join us for live sessions, upcoming webinars, and access to expert resources to stay informed and make confident trading decisions. Discover how WM Markets can help you stay ahead of the curve.
