As the 2024 US presidential election approaches, market participants are preparing for significant volatility.
Vice President Kamala Harris and former President Donald Trump are in a tight race, with Harris holding a narrow lead over Trump according to recent polling data.
The current political climate has led to a surge in cross-asset volatility, with investors particularly focused on the implications of the election results. The financial markets are reacting to the uncertainty surrounding the election, with implied volatility on the S&P 500 index outpacing realized volatility.
The US dollar has seen a notable decline, while emerging market currencies have gained ground. The recent removal of Chinese tariffs on Australian exports has been viewed positively.
The energy sector is poised for divergent outcomes depending on the election results, with Trump pledging to enhance domestic energy production and Harris expected to prioritize renewable energy initiatives. The defense sector is likely to see increased spending regardless of the election outcome, presenting opportunities for Australian investors. The healthcare sector may also see significant shifts depending on the election outcome, with Trump expected to advocate for a free-market approach and Harris potentially focusing on lowering drug prices.
As the election nears, market participants are closely monitoring the evolving political landscape and its implications for various sectors.