With the US presidential election just two weeks away, anticipation is growing. Donald Trump and Kamala Harris are neck-and-neck in the opinion polls, which has added to the drama of this unpredictable race.

The two candidates are far apart in their positions on key issues such as taxation and tariffs, with Trump considered pro-business and Harris identifying with the progressive flank of the Democratic Party. At first glance, this would mean that the stock markets would react more positively if Trump were elected president.

However, President Trump initiated a nasty trade war with China, which led both the US and China to slap high tariffs on imported products. Investors are in favor of Trump’s pledge to lower taxes but  are most definitely against tariffs and trade wars. Thus, a Trump victory would not necessarily translate into increased buying in the stock markets.

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The fact that there is no clear favorite so close to Election Day has increased the uncertainty over the outcome, and this could mean volatility in the stock markets. Opinion polls have consistently pointed to a dead heat in the popular vote, but of course, the election will be determined by who wins the most electoral votes. The markets dislike uncertainty, but that is what we can expect right up to Election Day.

Historically, stock market performance in the medium-to-long term has depended much more on key economic data such as inflation and employment than on election results.  Investors will be keeping a close eye on the November 5th election, but market returns are likely to depend more on the economic policies of the new president rather than on the election outcome.

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