The 2024 presidential election is shaping up to be a significant event that could have a major impact on the stock market, according to a recent report from UBS. With President Joe Biden and former President Donald Trump as the key contenders, the stark policy differences between the two candidates are expected to lead to significant market implications.
UBS predicts that the next eight months leading up to the election are likely to be particularly disruptive for investors, as the policies promulgated by the two candidates could have contrasting effects on the stock market. The bank’s research report outlines four potential election outcomes and their potential impact on equities.
In a “Blue Sweep” scenario, a complete democratic takeover could lead to a corporate tax hike and increased regulatory pressures, potentially negatively impacting equities. On the other hand, a “Red Sweep” scenario, with a Republican-led government, could extend the 2017 tax cuts and reduce the corporate tax rate, potentially boosting equities. However, Trump’s trade policies could counteract these gains.
Other scenarios include a Biden win with a split Congress, which could result in a muted market impact, and a Trump win with a split Congress, where financial markets would experience less tailwinds, but regulation would still be looser than under Biden.
The stock market has been a major focus for investors during the election year, with both Biden and Trump attributing the record-high market to their potential return to the White House. However, leading research firm Ned Davis Research has cautioned that the stock market may be on the verge of a correction, as excessive optimism wanes and sentiment dips into neutral mode.
Overall, the 2024 presidential election is expected to have a significant impact on the stock market, with investors closely monitoring the political climate and potential outcomes. As the election approaches, it will be important for investors to stay informed and prepared for any market fluctuations that may result from the election results.
