The experts of the Swiss financial holding UBS the Outlook by investors on the stock market reaction to the upcoming presidential elections in the United States. UBS believe that there is a high possibility of disputing the election results and possible recount, as it did in 2000.
Presidential elections in the United States are among the macroeconomic factors that affect the price of nearly all securities, including stocks.
As in the case of any adverse macroeconomic factors, and in the case of uncertainty, we see a negative reaction in the stock market. The current elections complicated conditions of the global pandemic COVID-19 and departed in a recession economy. Political experts say that in such circumstances, the current President of the United States Donald Trump is not just to win.
On Monday, the head of the U.S. division of UBS, Thomas McLaughlin wrote that he sees risks in a possible challenge of the election results and a recount, in case of loss trump the election.
So a recount occurred after the elections in 2000, which caused strong volatility of the stock market. The Dow Jones industrial fell more than 5% in the first two weeks after election day. Gold prices jumped as investors sought “safe-haven assets”.
McLaughlin warned clients about the possible consequences of a similar outcome this year and gave some tips.
“Prospects for the delayed announcement of the winner is a real possibility, but markets hate uncertainty, so it is reasonable to expect that safe havens like gold and government securities of the United States, will provide a “refuge”,” – wrote the expert.
However, the market reaction is likely to be short-lived, period of high volatility of the stock market in 2000 remained the first four days after contesting the elections, said UBS.
Thus, the experts of a reputable investment Bank asked its customers to be patient, pointing out that the potential volatility “should disappear,” as the high price of “safe-haven assets”.
For long-term investors, the company can be a good time to buy for the future amid falling prices, the situation on the stock market stabiliziruemost as soon as the reaction calms down and investors to abandon short-term strategies.
