US Election Day 2024: High-Stakes Choices for Market and the Global Economy

As the United States votes today, markets worldwide wait with bated breath, bracing for ripple effects from a high-stakes election between Kamala Harris and Donald Trump. This isn’t just about domestic policy; the election’s outcome will echo across financial markets, critical industries, trade partnerships, and the U.S. dollar. Investors, business leaders, and global allies alike are waiting for an answer to the key central question: what path will the U.S. economy take?

Historically, markets are steadier when administrations continue, valuing predictability over the surprise factor. A shift in leadership, on the other hand, tends to bring short-term volatility as investors adjust to new policies. This time, with two candidates offering strikingly different economic agendas, the stakes feel unusually high, and the market's reaction will likely reflect that. As early voting numbers emerge, initial responses have shown investors taking cautious positions, with stock markets holding steady but currency markets showing sensitivity to early vote counts. Depending on tonight's outcome, there is likely to be a gradual, stabilising rally under Harris or immediate volatility under Trump, reflecting investor anticipation of trade policy shifts.

Lessons from History: 2016 and 2020 Election Reactions

To understand what’s at stake, it’s worth looking back to the markets’ reactions in 2016 and 2020. When Trump won in 2016, Wall Street surged, with the Dow climbing as optimism grew around his promised tax cuts and pro-business stance. Industries like finance, fossil fuels, and manufacturing saw immediate gains as investors anticipated deregulation and corporate tax reductions. However, as his administration pivoted toward a protectionist “America First” approach, trade tensions—particularly with China—eventually unsettled markets, leading to a mix of short-term highs and long-term uncertainties.

In contrast, Biden’s 2020 win brought initial market caution. With the election held in the shadow of the COVID-19 pandemic, uncertainty lingered. However, as his administration emphasised stability and global cooperation, markets began to respond positively. Biden’s focus on extensive fiscal stimulus, including support for infrastructure and green energy, ultimately fueled a recovery rally in 2021. Tech and healthcare sectors benefited particularly well from the administration’s policies; for example, tech giants like Apple and Google saw boosts from digital infrastructure investments, while healthcare companies profited from heightened funding for vaccine development and medical innovation. Meanwhile, Biden’s multilateral trade approach calmed the U.S.-China trade rift that had disrupted markets under Trump - this approach alleviated tension in sectors such as agriculture and technology, helping to restore some trade routes affected by Trump’s tariffs.

But 2024 feels very different. While both previous elections were critical, this year’s vote comes against the backdrop of a post-pandemic economy and a world facing intensified geopolitical challenges. The ongoing war in Ukraine and recent turmoil in the Middle East cast long shadows over today’s election, amplifying the stakes. Global supply chains are more fragile, inflation is high, and central banks worldwide are walking a tightrope on interest rates. This unique landscape means historical patterns could shift, and markets may react with unexpected volatility as they navigate these added layers of uncertainty. For instance, energy markets may respond sharply if Trump wins and re-emphasises fossil fuel production, potentially impacting oil prices globally amid the Middle East crisis. Conversely, if Harris wins, investors may anticipate a more cautious approach that avoids destabilising energy markets, especially given European reliance on alternative energy sources due to the Ukraine conflict.

Market Stability and Economic Forecasts

A Harris Win: Steady as She Goes

If Harris claims victory, we’d likely see a sense of stability—something markets often reward. Investors might expect a continuation of recent policies, especially support for renewable energy, digital infrastructure, and healthcare. Harris leans towards moderate tax increases on corporations and higher earners, aiming to fund public services without jolting the markets. Her push for climate action and cooperation with Europe could position the U.S. as a leader in green technology, potentially attracting long-term investment in sustainability-focused sectors.

This stable, forward-looking agenda might bolster market confidence, drawing foreign investment and reinforcing the dollar. Harris’s commitment to multilateralism would also likely strengthen relationships with major trading partners, especially in Europe. For sectors tied to international markets, this predictability could mean smooth sailing ahead.

A Trump Win: Immediate Gains with Volatile Undercurrents

If Trump returns to the White House, prepare for some fireworks in the markets. Trump’s protectionist lean, especially on tariffs aimed at China and Europe, could shake up supply chains and push up costs for U.S. industries reliant on imports—think tech and manufacturing. His signature corporate tax cuts might drive a short-term rally, but tensions from potential trade disputes could lead to unpredictable market responses. Tariffs could mean higher costs for both American consumers and businesses, especially those reliant on imported components like electronics and automotive parts. Higher import costs may push companies to adjust pricing, potentially impacting inflation. Additionally, reimposing tariffs may prompt retaliatory tariffs, further complicating trade relations and creating supply chain challenges.

For domestic-focused sectors like fossil fuels and traditional manufacturing, a Trump win might seem like a green light for growth. But investors should also consider the dollar’s future under Trump: it might see brief strength from protective measures, but longer-term volatility is a real risk if trade conflicts escalate.

Sector Snapshots: Tech, Energy, and Healthcare

Technology: Under Harris, tech would likely benefit from investments in digital infrastructure and a push for sustainable tech. Her policies might sync well with Europe’s data privacy standards, opening up new markets. Trump, by contrast, could double down on tensions with China, making it costlier for U.S. tech firms to source parts or expand overseas.

Energy: Harris and Trump offer polar opposites here. Harris backs renewables with subsidies for solar, wind, and electric vehicles, in line with Europe’s green agenda. This could attract long-term investment in American clean tech. Trump, meanwhile, would likely push on deregulation and fossil fuel expansion, which could bring a short-term boost but isolate the U.S. from global green markets. Under Harris, policies like the Clean Energy Standard could incentivise companies to innovate in low-carbon technologies, strengthening links with global green markets. In contrast, Trump’s focus on fossil fuels may draw immediate gains from oil and gas firms but could limit U.S. involvement in the booming renewable market, especially in Europe and Asia.

Healthcare: Harris would push to expand the Affordable Care Act, likely benefiting providers and biotech firms in vaccine and medical research. Trump’s focus on lowering drug prices, however, could pressurise pharma profits and complicate cross-border trade. Expanding the ACA under Harris would likely increase patient access to healthcare, driving demand for healthcare services and boosting revenues for providers. Trump’s proposed drug price reforms could mean lower prices for consumers but could challenge pharma’s profitability, particularly for firms relying on high U.S. prices to fund international operations.

Global Trade and Currency Implications

Dollar Strength: A Tug of War

A Harris presidency might mean a steady, strong dollar, thanks to consistent, alliance-friendly trade policies. Her approach to fiscal cooperation would likely reassure foreign investors, keeping the dollar a solid safe haven. Stronger ties with Europe would also support economic resilience, giving both U.S. and international markets a steady foundation.

Trump’s "America First" approach, on the other hand, could spark dollar volatility. Short-term boosts might come as investors flock to the dollar for safety, but long-term stability could be at risk if trade tensions push other countries to diversify away from dollar-based transactions. Trump’s tariff-driven policies could even disrupt emerging markets, potentially leading to shifts in global currency flows.

Trade Partnerships: Alliances vs. "America First"

Harris would likely aim to rebuild and deepen partnerships, especially with the EU, on issues like climate, trade, and digital standards. Smoother trade relationships would mean fewer barriers for U.S. businesses abroad, keeping supply chains steady and enhancing the U.S.’s influence in global trade. In a post-Brexit UK, Harris’s multilateral approach could offer new opportunities for collaboration, as her administration would likely pursue joint climate and trade initiatives that the UK could benefit from, especially in areas like digital standards and green technology.

Trump, though, is expected to favour bilateral deals over broader alliances. His approach could strain long-standing relationships, adding costs for U.S. exporters and potentially opening the door for the EU and China to strengthen their own trade networks. Should these alliances shift, U.S. firms relying on global markets could face increased competition and reduced access, impacting their long-term growth prospects. For the UK, a Trump win may mean a stronger chance for a direct trade deal, though potentially on terms favouring U.S. interests. It could present both opportunities for the UK but also risks, depending on Trump’s stance towards U.S.-UK economic relations.

Conclusion: A High-Stakes Decision for Global Markets

As the votes come in tonight, the impacts are not solely relevant to the US, but impact the global economy. A Harris victory would signal a more stable, climate-conscious, and cooperative approach, potentially calming markets and securing the dollar’s place as a reliable safe haven. Her policies align with a growing global emphasis on sustainability and multilateral cooperation, offering a steady hand on economic policy that international markets would likely welcome.

In contrast, a Trump win would mean a return to protectionism, corporate tax cuts, and deregulation. While his approach could fuel short-term gains for U.S.-focused sectors like fossil fuels and manufacturing, the long-term outlook remains uncertain amid potential trade conflicts and strained global relations.

Tonight’s outcome will set the tone for years to come, sending shockwaves through markets, trade networks, and international alliances. Whether it’s Harris’s stable, collaborative path or Trump’s bold, protectionist approach, the results will leave a mark on the U.S. economy and its place on the world stage.