In the event of a Trump victory, UBS predicts that there will be an increase in tariffs, potentially disrupting trade and causing inflation. This could have a negative impact on consumer discretionary, industrials, and information technology sectors. On the other hand, Trump is likely to lower taxes and increase the budget deficit, stimulating the economy but also leading to inflation and higher interest rates. Less regulation is expected, benefiting sectors like fossil-fuel energy and financial services.
If Biden is re-elected without Democratic control of Congress, the status quo will remain. Expect more regulation and higher taxes for the wealthy and companies compared to Trump’s administration. Executive orders are expected to benefit companies focusing on renewables and energy efficiency in industrials, materials, and utilities sectors.
A landslide victory for either party could disrupt the markets. Biden may achieve legislative feats previously unattainable, leading to higher taxes on the rich and corporations. Clean energy companies may benefit while banks and fossil-fuel companies could face challenges.
A Trump landslide victory would be particularly unsettling financially, as it could result in significant policy changes. The New York Times has reported on the plans for a potential second Trump administration. The impact of a Trump or Democratic landslide has not been factored into the markets yet.
Anthony Saglimbene, chief market strategist for Ameriprise Financial, warns that a one-party control of Congress could increase volatility in the markets. However, he believes that the markets are likely to recover quickly post-election. History shows that the market tends to refocus on interest rates and corporate profits once the election cycle is over.
