Investing.com — Markets are increasingly factoring in the possibility of a Donald Trump victory and Republican control of Congress. However, Gavekal Research has warned that current polls do not necessarily support the expectation of a “red wave” and this could lead to a potential “violent reversal” in U.S. stocks.
Tan Kai Xian from Gavekal Research stated in a recent note that if Trump were to win the White House but Democrats were to take control of at least one house of Congress, or if there were delays and uncertainty regarding the election results, there could be a significant negative impact on U.S. equities.
Despite betting markets giving Trump a 60% chance of winning, up from 36% in early August, recent opinion polls do not conclusively support the notion of a Republican sweep. The GOP’s lead, even in key swing states, is within historical margins of error.
The market’s increasing confidence in a Republican victory has been reflected in recent trends, with the energy sector rising by 16% since mid-August and the KBW Bank Index increasing by 7%. This suggests that investors are anticipating more favorable policies for these industries under a Republican administration.
However, even if the polls are inaccurate and Republicans do secure control of the White House, Senate, and House of Representatives, the market reaction may not be as significant as expected. On the other hand, if the election outcome does not result in a GOP sweep as the polls indicate, market movements could be much more pronounced.
In conclusion, the uncertainty surrounding the upcoming U.S. election and the discrepancy between market expectations and poll results could lead to significant volatility in U.S. stocks.
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Investing.com — Markets are increasingly factoring in the possibility of a Donald Trump victory and Republican control of Congress. However, Gavekal Research has warned that current polls do not necessarily support the expectation of a “red wave” and this could lead to a potential “violent reversal” in U.S. stocks.
Tan Kai Xian from Gavekal Research stated in a recent note that if Trump were to win the White House but Democrats were to take control of at least one house of Congress, or if there were delays and uncertainty regarding the election results, there could be a significant negative impact on U.S. equities.
Despite betting markets giving Trump a 60% chance of winning, up from 36% in early August, recent opinion polls do not conclusively support the notion of a Republican sweep. The GOP’s lead, even in key swing states, is within historical margins of error.
The market’s increasing confidence in a Republican victory has been reflected in recent trends, with the energy sector rising by 16% since mid-August and the KBW Bank Index increasing by 7%. This suggests that investors are anticipating more favorable policies for these industries under a Republican administration.
However, even if the polls are inaccurate and Republicans do secure control of the White House, Senate, and House of Representatives, the market reaction may not be as significant as expected. On the other hand, if the election outcome does not result in a GOP sweep as the polls indicate, market movements could be much more pronounced.
In conclusion, the uncertainty surrounding the upcoming U.S. election and the discrepancy between market expectations and poll results could lead to significant volatility in U.S. stocks.
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