How does the US elections influence the markets?

How does the US elections influence the markets?

By FlashSolver | ChartNite | 30 Oct 2020

How does the US elections influence the markets?

The 2020 US presidential election day is just around the corner, it’s scheduled for Tuesday, November the 3rd 2020, Not every presidential election is followed so closely by the media, but when it comes to political events of the world’s largest economy, it is obvious that they hold major importance for world politics and economics, the presidential election of the US is seen as one of the most important political events.

In order to estimate what might happen to the market after the elections, it’s important to look at the candidates’ proposals and the initiatives they offer.

Donald Trump

The current president’s policies are prioritising American manufacturers, imposing higher tariffs on goods from the EU and maintaining a strong foreign policies against China, Tax breaks for goods produced in America, A second round of $1,200 stimulus checks for COVID-19 economic relief.

Donald Trump has been denying the global warming and rolled back a lot of environmental regulations, approving oil and gas drilling in Alaska and weakening automobile fuel efficiency standards.

Joe Biden

Covering many problems that the US is facing: jobs, economic recovery, healthcare, racial economic inequality, guns and violence control, housing and so on, Raising the minimum wage to $15/hr, limiting the cost of healthcare coverage to 8.5% of a person’s income, $2 trillion plan to fight climate change and supporting clean energy, Increasing the corporate tax rate from 21% to 28%, Increasing the top tax rate for individuals making more than $518,400 to 39,6%, Interest-free loans for businesses that suffered due to COVID-19, Free education for families that make less than $125,000.

The elections creates uncertainty and high volatility in the markets, In order to understand the impact on the market during the election, it is important to do the necessary preparatory work: this may be for instance to decide on the assets you are most interested in and see how the election of one or the other candidates might influence them.

For instance, in the event of a Biden victory, the US dollar might drop and Gold might jump higher due to his tax policy and the stimulus to the economy it could provide, or the possibility that Oil drops with Trump’s victory due to the increased supply, Or maybe the Dollar with strengthen with Trump’s Victory due to his trade war against China.

There is no way to guarantee a certain outcome, you have to have a bias and a strategy in place, for me personally I will be watching the markets in the election week for potential setup, My plan from the begining of the year I was selling any dollar rallies but my bias might change if the markets moved drastically and changed the market outlook.

What is your bias and what is your plan if Biden or Trump won? What do you think will happen?

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