As the U.S. presidential election approaches, the financial markets are evaluating the potential impacts of a Kamala Harris victory. Analysts at Citi Research have identified several key investment strategies, dubbed ‘Harris trades,’ which could unfold should the Democratic candidate prevail. These strategies reflect a shift from a Trump-centric market outlook to one influenced by Harris’s policies, focusing on the interplay between political change and market reactions.
- The unwinding of Pro-Trump Trades: If Kamala Harris wins, markets might initially reverse trades favouring Trump’s policies such as tariffs, fiscal expansion, and deregulation.
- Impact of a Divided Government: Any significant market movement driven by Harris’s policies could be limited if she faces a divided Congress, constraining her ability to implement major changes.
- Effects on International Markets: Harris’s presidency might bring stability to international markets. Reduced geopolitical risks under her administration could benefit emerging markets and European equities.
- Currency Implications: The U.S. dollar might weaken under a Harris administration if trade tensions diminish, which could support non-U.S. equities.
- Commodities Outlook: A Harris win could boost precious metals like gold due to bullish sentiment, while potentially softening oil prices.
These potential shifts reflect broader market sentiment towards a decrease in uncertainties associated with Trump’s aggressive policies rather than specific policies from Harris herself.
