The US Presidential Election 2024: Could it Impact the Markets?
As we slowly wind down 2023, this week we’re looking ahead. With the US presidential election on the horizon, 2024 looks like it could be an interesting one for the markets. Today, we’ll give you a quick overview of the election, plus our regular market overview for the week.
The historical impact
If you check previous stock market performance around US presidential elections, you’ll likely notice that its performance is a little calmer in the 12 months leading up to the election.
That effect is true for both the equities market and bond markets. In the year leading up to a presidential election, equities gained an average of less than 6%. During non-election years, the average is more than 8%. Bonds tend to deliver returns of about 6.5% leading up to presidential elections, significantly less than the 7.5% returns they usually deliver.
After midterm elections, the market tends to rebound quickly. But that’s not the case for presidential elections. Stock market returns tend to be lower for the first year after the election, while bonds tend to outperform their normal levels.
If a new party is elected to the Oval Office, the stock market’s returns average 5%. When the same president is re-elected or the party retains the presidency, returns have been slightly higher, averaging 6.5%.
2024 US Presidential and Congressional Race
The most eagerly anticipated election next year, the US presidential election, is scheduled for November 5, 2024. Its outcome will determine the direction of US economic policies for the next 4 years and will have a ripple effect on global markets.
As mentioned, if the Democrats win, the markets are likely to react favourably, as investors tend to have a positive bias towards incumbents. However, if a Republican emerges as a strong contender, the outcome could be more unpredictable, leading to increased volatility in the markets.
With that in mind, let’s take a look at who has a chance of winning.
Who are the top contenders?
#1 Joe Biden (DEM)
SkyBet odds: 2/1
The 46th and current president of the United States. At 81, Joe Biden is the oldest president in US history and worries about his age, health and relatively poor approval ratings are concerning many Democrats.
His campaign will likely focus on environmental sustainability and foreign policy — two strengths of his term so far.
However, the economy will likely be the most important factor in his re-election campaign. While the US has, so far, avoided a recession, 40-year inflation highs in 2022 and the cost of food and fuel is worrying voters.
#2 Gavin Newsom (DEM)
SkyBet odds: 10/1
Gavin Newsom is a Democrat and the 40th Governor of California. Previous to that, he served as mayor of San Francisco for 8 years.
Newsom is a self-described progressive and has focused on issues such as climate change, healthcare, and education during his time in office. He’s also a vocal critic of Donald Trump, so potential sparring could be fun to watch! If the worries over Biden’s age and ability to balance the economy are brought out, Newsom could well be the guy that the party choose to take on the Republicans.
#3 Donald Trump (REP)
SkyBet odds: 5/4
Former President Donald Trump launched his bid to reclaim the White House in November last year, aiming to become only the second person to win two non-consecutive terms. BAccording to bookies, he’s the favourite to win the presidency next year.
He and his followers maintain that he did not lose the 2020 election and they are on a mission to set the record straight. Doing that looks like it could be an uphill struggle, with the 77-year-old having been impeached twice, and currently facing no less than 91 criminal charges.
If he manages it, strap yourself in for another rollercoaster. Who knows where this one could end up.
#4 Nikki Haley (REP)
SkyBet odds: 9/1
Should those hurdles prove too high for Trump, the leading Republican to potentially pip him to the nomination is Nikki Haley.
Haley is a former South Carolina Governor and US ambassador to the UN (appointed by Trump). She’s a rising star in the Republican party and is much more traditionally conservative than her former boss.
She’s expected to advocate for lower taxes, deregulation, and a strong national defence. She is also likely to highlight her record on education and economic development. Haley appears to want to unite the US electorate and foster a new era of bipartisan politics. The US is more divided than ever, so such a policy has the potential to be wildly successful or catastrophic — likely impacting the US economy either way.
So, what could happen?
If either of these Republicans ousts the incumbent Democrat, there could be stormy seas on the horizon.
That said, any fluctuation in the Congressional makeup could also cause some turbulence. The Republicans currently control the Senate, while the Democrats are in control of the House of Representatives.
Whichever way you look at it, this election will be a nail-biter and not something you want to miss!
Other notable elections
While the US presidential election is easily the one most likely to impact economies across the world, it’s certainly not the only election coming up next year.
2024 will play host to 23 presidential elections, 10 parliamentary elections, and 24 state and national elections across the globe. Some of the most important include:
- 2024 US Senate and House of Representatives elections
- 2024 British general election
- 2024 Russian presidential election
- 2024 European Parliament election
- 2024 Indian General Election
Are you ready?
Which of these elections is set to bring the most volatility? Do you have any predictions? Join our conversation over on X — @_contentworks!
Top fundamental events week commencing 18/12/23
It’s going to be a pretty busy week in the markets. Let’s check it out.
Monday
● EUR — German Ifo Business Climate
Tuesday
● AUD — RBA Meeting Minutes
● JPY — BoJ Interest Rate Decision
● CAD — Inflation Rate YoY
● USD — Building Permits Prel
Wednesday
● JPY — Balance of Trade
● EUR — German GfK Consumer Confidence
● GBP — Inflation Rate YoY
● USD — CB Consumer Confidence
Thursday
● USD — GDP Growth Rate QoQ Final
Friday
● JPY — Inflation Rate YoY
● GBP — Retail Sales MoM
● USD — Core PCE Price Index MoM; Personal Income; Personal Spending MoM; Durable Goods Orders; UoM Consumer Sentiment Index
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
