As the election campaign heats up in the United States for the presidential elections on November 5, investors are pondering where to allocate their resources in a potential Kamala Harris administration.
With a strong focus on environmental sustainability, social inclusion, and infrastructure modernization, her presidency may significantly impact global financial markets.
However, investing in such a context demands a thorough analysis of various scenarios depending on Congress’s composition.
Considering Kamala Harris as President, investors wonder where to invest in stocks.
Notably, a study by Schroders reveals that in the past 96 years, whenever the S&P 500 surged in the three months leading up to elections, the incumbent president or party was typically reelected.
This suggests that if Wall Street’s rally continues, Harris might have a substantial chance of winning.
Despite this, historical data indicates that stock prices tend to rise irrespective of the election outcomes.
Between 1945 and now, average performance of the S&P 500 stood at +11% under Democratic leadership and +7% under Republicans, according to CFRA Research.
With an election platform aimed at revitalizing manufacturing, supporting the middle class, and aiding vulnerable populations, it’s likely that fiscal policies would tighten for large corporations, potentially increasing corporate taxes and taxing the wealthy more.
In such a scenario, sectors benefiting from these fiscal policies include healthcare, electric vehicles, and residential construction.
Moreover, Harris has pledged new investments in aerospace, artificial intelligence, and bio-manufacturing.
Kamala Harris’s presidency could also impact the bond market considerably, depending on the fiscal and monetary policies she manages to implement.
An expansive fiscal strategy may lead to increased public spending on infrastructure, green transition incentives, healthcare, and social policies.
This could escalate the public deficit, necessitating new government bond issuances, which must offer attractive yields to account for growing debt risks.
Additionally, heightened spending might raise expectations of future inflation, compelling the Treasury to increase long-term yields to protect against the erosion of purchasing power.
In this landscape, yields on long-term bonds could rise faster than short-term ones, leading to a steepening of the yield curve.
Nonetheless, if the Federal Reserve maintains an accommodating monetary policy to bolster economic growth and financial stability, interest rates could remain low, limiting yield increases.
Given Harris’s commitment to environmental policies, bonds linked to sustainable projects, like green bonds, are likely to attract heightened investor interest.
With Kamala Harris as President, Bitcoin’s price might see a rise.
Recently, Harris has commented positively on cryptocurrencies, emphasizing the importance of maintaining technological innovation and the U.S.’s dominance in blockchain tech.
Experts suggest that regardless of the election outcome, the cryptocurrency market is gearing up for a bull phase, driven by increased fiscal spending which could enhance demand and value over the long run.
BlackRock predicts Bitcoin might emerge as a global reserve currency, potentially reaching $2.9 million by 2050, while Standard Chartered foresees a price of $200,000 by 2025, irrespective of who occupies the White House.
Under Kamala Harris, the U.S.
dollar could weaken against other major currencies, particularly in a setting of declining inflation accompanied by potential new interest rate cuts by the Fed.
Harris’s trade policies, more favorable than Trump’s, could also dampen the dollar’s strength by lessening the necessity for investors to seek alternative hedges against market volatility, according to Morgan Stanley.
Experts caution about potential volatility in the currency markets leading up to the November elections.
Gold prices could be affected by a Harris victory as increased government spending might drive up budget deficits, stoking inflation expectations and market uncertainty.
Analysts at Solomon Global believe this could heighten gold demand, historically viewed as a hedge against inflation, thus driving up prices.
Moreover, changes in regulatory approaches, such as higher transaction taxes, could destabilize Wall Street, pushing capital towards safer assets like gold.
The information and opinions contained in this article should not be used as the sole basis for investment decisions.
Readers retain full responsibility for their investment choices, as only they understand their risk profile and timeframe.
The information is provided for informational purposes only and does not constitute an offer or solicitation for public savings.
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