As the US presidential election approaches in November, analysts predict rising equity market volatility due to policy uncertainty. An investment bank advises against major portfolio changes solely based on the election but suggests considering short-term risk management.
The bank highlights two baskets of stocks that could benefit from likely outcomes: a Trump victory with a GOP Congress or a Biden victory with a split Congress. For a Trump administration, sectors like steel, aluminium, and solar cells might gain from higher tariffs and relaxed regulations, benefiting traditional energy and financial sectors.
In contrast, a Biden win with a split Congress would focus on executive actions and regulatory oversight for climate change initiatives, though recent Supreme Court decisions could limit federal regulatory power.
The bank cautions against basing portfolios on specific election outcomes due to high uncertainty and recommends maintaining flexibility to adjust as new information emerges.
