The 2024 presidential election, with President Joe Biden and former President Donald Trump as the key contenders, is expected to significantly impact the stock market, according to UBS.
What Happened: UBS predicts that the stark policy differences between the two candidates could lead to significant market implications, reported Business Insider. The bank’s research report, published on Tuesday, highlights that the next eight months leading up to the election are likely to be particularly disruptive for investors.
“There are significant market implications arising from the stark contrast in the policies promulgated by the two candidates for president,” the bank wrote.
The report outlines four potential election outcomes and their potential impact on the stock market:
- Blue Sweep: A complete democratic takeover could lead to a corporate tax hike and increased regulatory pressures, potentially negatively impacting equities.
- Biden wins, Congress splits: This scenario, similar to the current legislative setup, could result in a muted market impact.
- Red Sweep: 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.
- Trump wins, Congress splits: Under this scenario, financial markets would experience less tailwinds, but regulation would still be looser than under Biden.
Why It Matters: The 2024 presidential election has been a major focus for investors, with the stock market potentially being influenced by the political climate, as experts have suggested.
The election year has also seen a record-high stock market, with both Biden and Trump attributing this to their potential return to the White House.
However, the stock market, which has been on a record-breaking spree, may be on the verge of a correction, according to a leading research firm. Ned Davis Research (NDR) has cautioned that the current market conditions could lead to a correction, although a bear market is not imminent. When this excessive optimism wanes and the sentiment composite dips into neutral mode, the MSCI ACWI tends to decline, NDR said. “[W]ith the one-year and four-year cycles becoming less favorable, a correction can be expected,” NDR added.
Joe Biden and Donald Trump. Photos via Shutterstock.
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