The 2024 US election is likely to have a major impact on global markets. In this series, we’ve analysed how the US election results could affect crypto prices, and we’ve considered what a Donald Trump or Kamala Harris win might do for forex markets.  In this instalment, we’ll focus on equities. Here are some scenarios for stock markets if Trump or Harris takes the White House. 

If Donald Trump wins the White House 

If Trump becomes president with a legislative majority, he’ll be in a position to enact his policies more quickly and with fewer compromises.  

As we have discussed in this series, Trump’s major campaign messaging includes tax cuts, tariffs, and cracking down on immigration. 

These policy proposals are broadly inflationary. In the immediate term, large tax cuts could boost domestic spending, leading to economic growth. Tariffs could also boost domestic production, while increasing the cost of imports. Lower rates of immigration will tighten the labour market, potentially causing an increase in wages. 

Trump has also suggested he might like more control over Federal Reserve policymaking. It’s unclear whether President Trump would actually attempt to undermine Fed independence, but he would be more likely to succeed with broad legislative support.  

Taking these considerations together, a Trump victory could favour US manufacturing stocks. In particular, defence stocks could get a boost from increased military spending and a hotter economy. The Trump administration could also roll back financial sector regulation, lifting banking stocks. Oil and gas are also obvious beneficiaries of a Trump win. (The wild card is the electric vehicle sector. Would Trump reduce support for EV manufacturers, or will Elon Musk’s backing affect his decision making?) 

Trump has spoken extensively about the need to invest in infrastructure, though his track record is mixed. A commitment to rebuilding US infrastructure, plus strong short-term economic growth, could see infrastructure companies getting a lift. 

We’ve previously discussed how observers expect a crypto bump if Trump wins. Similarly, stocks in crypto exchanges and related business could see a boost. 

The global view 

Tariffs would also have consequences for non-US stocks, depending on how widespread they are. Trump’s rhetoric has largely focused on outperforming China, but he has on occasion taken a more broadly protectionist tone.  

There’s also a political dimension. Europeans remain uncertain about whether Trump will continue to support NATO. More generally, Trump’s backing for arming Ukraine is far from certain. In response, we might expect more investment in the European defence sector. German defence stocks, in particular, could benefit. 

Shares in European export-driven firms, such as automakers and luxury goods manufacturers, could also be negatively affected by US tariffs.  

If Kamala Harris becomes President 

If Harris wins in November, her policies likely would mark less of a break from economic orthodoxy than Trump’s. That said, there are particular sectors where Harris’s policy proposals might make an early impact. 

Harris could expand Biden-era industrial strategy supporting US green energy. Those policies would obviously boost manufacturers of green technology themselves. They would also be a boon to companies that supply the commodities, such as rare earth materials, that are needed for electric vehicles and clean energy infrastructure.   

Harris’s plan to build 3 million new homes could boost stocks in the construction sector. Democratic support for infrastructure investment would also lift construction and engineering stocks. 

And US companies that depend on export markets – like luxury goods companies – might see an increase in share price if Harris wins, with the prospect of reciprocal tariffs no longer on the horizon. 

 Don’t forget the lawmakers 

Despite the political rhetoric, there is not always as big a gulf between Trump’s policy proposals and Democratic party policy reality. For instance, Trump talked tough about protecting US industry from China. Yet the Biden administration retained and even extended many Trump-era tariffs on Chinese imports.  

Yet there are substantial points of difference, notably on taxes and spending. The consequences could be significant. A recent study estimates that President Trump would increase national debt nearly twice as much a President Harris.  

However, the extent of Trump tax and spending policies will depend, in part, on whether the Republicans control the House and Senate. A clean Republican sweep would mean Trump is likely to cut taxes quickly and implement his spending plan with relative free rein. 

Democratic control of the House and/or Senate, by contrast, could moderate the extent of Trump’s tax cuts and spending proposals. 

Look to the medium to longer term, a Democratic clean sweep of the House and Senate might also provide an opportunity for further healthcare reform, which could boost the sector. 

For deeper insight into how the US Elections affects global markets, stay tuned for our US Election coverage on the Overleveraged Podcast. Find the latest episodes here. 

All opinions, news, research, analysis, prices or other information is provided as general market commentary and not as investment advice and all potential results discussed are not guaranteed to be achieved. The information may have been derived from publicly available sources, company reports, personal research, or surveys. Past performance is not indicative of future performance. Trading carries risk of capital loss. Service available to professional clients only.