Currently, many Wall Street strategists believe that regardless of which party wins the election, US stocks will experience a rally.
Morgan Stanley's Wilson believes that the US election may become a 'clearing event', opening the door for a surge in the stock market at the end of the year. Moreover, historical experience can also support a year-end market rebound, as US stocks typically perform strongly at year-end.
J.P. Morgan's Dubravko Lakos-Bujas stated that once the election results are announced, the stock market will perform strongly. Market confidence will strengthen, volatility will decrease, and investors will choose to relax their hedging strategies while refocusing on Federal Reserve policies. At the same time, corporate earnings continue to show resilience, which are key factors driving the stock market further up.
Jefferies analysts analyze that if the S&P 500 rises in the week before the election, the month after the election often performs poorly. However, if the S&P 500 shows weakness in the week before the election, the year-end performance tends to be the best, averaging an increase of about 4%.
Jefferies strategist Andrew Greenebaum wrote in a report on Tuesday: 'Especially in the context of strong economic fundamentals and the Federal Reserve moving towards rate cuts, we believe that once the election dust settles, this will be an extremely attractive opportunity.'
China Postal Securities observes the impact of Trump's tariff policy during his first term on the RMB exchange rate and the A-share market.
It can be seen that the imposition of tariffs does indeed cause a certain shock to Chinese assets in the short term. In particular, when the US government announced a series of tariffs on Chinese exports in March 2018, and when the first batch of $34 billion tariffs officially took effect in early July of the same year, the market reacted strongly, leading to the depreciation of the RMB and a period of decline in the A-share market, with pessimistic sentiment continuing to ferment. However, when the US further expanded the tariff scope in 2019, the A-share market only experienced a brief decline, followed by a sideways consolidation of the Shanghai Composite Index, while the Growth Enterprise Market began a wave of upward momentum, driven by domestic substitution and technology independence logic leading sectors such as electronics and computers to experience a technological bull market. This is closely related to domestic policy support and an improvement in the global liquidity environment at that time.
Yuekai Securities believes that Trump's election is beneficial for the US dollar, US stocks, and Bitcoin, while US bonds will be under pressure. Trump advocates for tax cuts for businesses, which will support US stocks. From a sector performance perspective, this is positive for fossil energy, cryptocurrencies, manufacturing, and the artificial intelligence sector.
