US Elections 2024: 3 Scenarios for Global Markets

The High-Stakes US Elections of November

The upcoming US elections in November, with the unexpected challenge between Trump and Harris, represent the most anticipated political and economic event globally.
The outcome, whether one or the other candidate wins, will have a significant impact on stock markets, currencies, bonds, commodities, and the future of global trade, with the issue of the trade challenge with China at the forefront.

Possible Scenarios and Market Forecast

As analysts eagerly await more details on the economic and financial programs of the two candidates, particularly Kamala Harris, who entered the race for the White House after Joe Biden’s withdrawal, they are trying to interpret the approach and ideas of the potential presidents from a financial perspective.
ING strategists have proposed three possible scenarios for markets and the global economy based on the election result.

1.
Trump’s Overwhelming Victory

In the scenario where Donald Trump wins by a wide margin, and the Republicans secure the majority in the House and Senate, experts believe that the priorities will be tax cuts and immigration control.
The focus would be on domestic work and growth, rather than on international issues like Taiwan and Ukraine.

According to ING, under a Republican dominance, these are the market forecasts:
Euro-dollar: 1.02 (Q4 2024); 1.00 (Q2 2025); 0.95 (Q4 2025)
Treasury 10-year yields: 3.90 (Q4 2024); 4.20 (Q2 2025); 5.20 (Q4 2025)
Oil price: 87 (Q4 2024); 81 (Q2 2025); 74 (Q4 2025)

This scenario is seen as the most bullish for the dollar in the medium term.
Tax cuts are expected to support oil prices in the short term, although stricter sanctions against Iran pose a key risk to oil price increases.

2.
Trump’s Victory with a Democratic Senate

In a second scenario, Trump wins, but with a divided Congress and a Democratic-majority Senate.
In this case, the Republican president may extend tax cuts but face difficulties in passing other reductions or spending priorities.
Foreign policy might regain importance on the agenda, with increased pressure from the Democrats, especially regarding a potential peace between Russia and Ukraine.

Financial market predictions under such circumstances include:
Euro-dollar: 1.06 (Q4 2024); 0.98 (Q2 2025); 1.03 (Q4 2025)
Treasury 10-year yields: 3.80 (Q4 2024); 4.10 (Q2 2025); 4.90 (Q4 2025)
Oil price: 85 (Q4 2024); 77 (Q2 2025); 70 (Q4 2025)

3.
Kamala Harris’ Victory

The third scenario envisions Harris winning but with a divided Congress: Republicans holding the House and Democrats the Senate.
Analysts estimate that the president would likely abandon Trump’s tax cut plan in favor of higher taxes for businesses and the wealthy.
In foreign policy, there would be more support for Ukraine and closer collaboration with global allies, while tensions in the Middle East are expected to persist.

In trade, Harris might incentivize businesses to move to the US instead of pursuing a strict tariff policy.
A more certain trade environment could provide positive signals.
A stricter fiscal environment, coupled with slightly weaker growth and reduced inflation, may lead the Fed to a more flexible monetary policy stance compared to Trump scenarios.

Market forecasts with Harris as US president by ING strategists include:
Euro-dollar: 1.12 (Q4 2024); 1.15 (Q2 2025); 1.18 (Q4 2025)
Treasury 10-year yields: 3.60 (Q4 2024); 3.90 (Q2 2025); 4.60 (Q4 2025)
Oil price: 83 (Q4 2024); 79 (Q2 2025); 78 (Q4 2025)

In the coming months, analysts will refine their forecasts, especially with more detailed programs and increasingly reliable surveys.
Currently, Harris’s entry seems to have weakened Trump’s previously solid advantage in the contest with Biden.