The US Presidential Election: The Candidates, Their Positions, and Potential Market Impact

Reading time: 12 minutes

The What; The Who; The When

Almost half of the world’s population will have voted in national elections by the end of this year. However, one election race has undoubtedly captivated audiences globally and continues to generate daily headlines: the 60th US presidential election. Americans will head to the ballots on Tuesday, 5 November 2024, to elect their next president, vice president and Congress. 

In what was initially set to be a rematch between President Joe Biden and former President Donald Trump, following the former’s withdrawal, voters are now being called upon to decide whether Trump will go on to occupy the White House for a second term. The Democrats have endorsed current Vice President Kamala Harris to run, who, if she wins, would see her become America’s first female president. Harris has selected Minnesota Governor Tim Walz as her running mate, while Trump has gone for more controversial Ohio senator JD Vance.  

On election day, Americans will also be voting for new members of Congress, consisting of the House of Representatives and the Senate. The two chambers initiate spending plans, vote on key government appointments, and pass laws. It should be noted that no bill can become a law without being passed by both houses and that Congress can override a presidential veto.

Given the US Electoral College system, each state is given a number of votes that is more or less in line with the size of its population. This means that a total of 538 electoral college votes are up for grabs, with a candidate needing 270 to win. As most 50 states always vote for the same party, who will go on to become president is just down to a handful of so-called swing states, including North Carolina, Arizona, Georgia, Nevada, Pennsylvania, Michigan, and Wisconsin. 

Although election results are usually announced on the same night, there have been cases (for example, in 2020) where it has taken days for the result to be disclosed, especially if it is close and mail-in votes are a determining factor.  Results will be officially announced after the Electoral College Vote is certified by Congress in January 2025; the new president and vice president are sworn in a couple of weeks later. 

Where Do the Two Candidates Stand on Key Issues?

The Debate, The Assassination Attempts and What Next?

On 10 September, over 67 million people watched the televised presidential debate between Trump and Harris. During the 90-minute duel, aside from personal attacks, the two candidates also touched on topics such as the economy, immigration, abortion, democracy and climate change.

A Reuters/Ipsos poll conducted shortly after the debate showed that Harris had maintained her lead among registered voters over Trump: half believed Harris won the debate, and another half said that she gave the impression of having higher moral integrity than her contender. 

Similarly, according to a YouGov poll, 54% of registered voters who watched at least some of the debate thought that Harris was the winner, while 31% said Trump was. Although data suggests that most who watched the debate felt Harris came out on top, this does not necessarily mean she will get more votes in November’s election. 

During this election season, US voters were also witness to two assassination attempts on Donald Trump. Although following the July attempt on his life, Trump gained a slight increase in the polls by about 1-2 percentage points; Biden dropping out of the race and Harris replacing him reshaped the contest. The second assassination attempt on Trump did not produce the same imagery nor the rush of sympathy and support the first had. 

Harris accepted an invitation from CNN for a second debate this month; however, Trump declined, saying it was ‘too late’ for another one.

The National Polls and Past Misses

According to a three-day Reuters/Ipsos poll that closed on Monday, 23 September, Harris leads Trump 46.61 per cent to 40.48 per cent – slightly higher than the 5-point advantage she had over him in an earlier poll conducted during the same month. 

While national polls can be considered representative of the electorate’s views, the Electoral College’s state-by-state results determine the winner, with the seven battleground states likely to be decisive. A recent New York Times/Siena College poll indicated that Trump had marginal leads in Arizona, Georgia, and North Carolina. 

It should also be noted that polls underestimated support for Trump in 2016 and 2020. Some researchers have argued that standard poll samples include voters who feel more strongly about politics and its significance to their identity, whereas during actual presidential races, lower-propensity voters also turn out. Hence, polling failed to accurately predict how much support Trump had, in fact, had in the past. 

Current Market Landscape

With the US Federal Reserve (Fed) announcing a 50-basis point rate cut in September and signalling further rate reductions this year, attention is shifting to the upcoming US presidential election and key macroeconomic statistics. Although empirical data implies that market fluctuations in the run-up to elections normalise shortly thereafter, pre-election periods tend to be filled with anticipation and uncertainty, which markets do not like.

Unquestionably, the presidential race is a close call, as it has been in previous US elections. Regardless of the outcome, the US economy remains reasonably firm with the Fed on course to achieve a ‘soft landing’. This is despite the central bank raising rates at 11 meetings between early 2022 and mid-2023 to 5.25-5.50% to tackle rampant inflationary pressures. 

• Real US Gross Domestic Product increased at an annual pace of 3.0% in Q2 24 (according to the final estimate from the Bureau of Economic Analysis). This was largely bolstered by an uptick in consumer spending (2.8%). 
• US inflation is also heading in the right direction; price pressures have cooled considerably since pencilling in 9.1% in June 2022. The August 2024 CPI inflation (Consumer Price Index) report revealed that consumer inflation slowed to 2.5% compared to August 2023. 
• The US jobs market, albeit cooling, is not falling off a cliff. The economy added 142,000 jobs in August; although less than expected (the market’s median estimate was 160,000), it was still comfortably north of July’s reading of 89,000. Unemployment also ticked lower to 4.2%, and average hourly earnings observed growth according to both month-on-month and year-on-year measures.

Long-Term Chart Studies

US Dollar Index:

Chart studies for the US Dollar Index highlight that price action on the monthly chart is closing in on major support from 99.67. Sharing chart space with the 50-month simple moving average at 100.00 and two nearby Fibonacci retracement ratios around 98.72, this area is a clean support zone worthy of attention.

However, while the confluence around the above-noted support zone is noteworthy, the reaction from the area in mid-2023 failed to prompt any meaningful highs, indicating a lack of commitment to the support. Given the Relative Strength Index (RSI) has probed south of its 50.00 centreline (negative momentum), this throws light on a possible run lower towards channel support, extended from the low of 72.70.

Chart Created by TradingView

S&P 500:

Last week was one of record highs for the S&P 500, testing 5,767 and advancing for a third consecutive week. This followed a failed evening star bearish pattern on the weekly timeframe. For the aforementioned chart, support could form around local descending support in the event of a correction (extended from the high of 5,669). On the daily timeframe, support is seen around 5,656, complementing the potential weekly support line.

Overall, this remains a buyers’ market, with any correction likely to attract dip-buying, particularly at the weekly/daily support combination.

Historical Perspective

Since the early 1950s – that is, 18 presidential elections – US stocks tend to post moderate gains during election years. Interestingly, total returns for the S&P 500 are usually greater in non-election years. However, given the small sample set, it is understandably challenging to form statistically significant conclusions; research shows no direct correlation between the price of US stock markets and the US presidential elections.

Of note, the S&P 500 is up an eye-watering 20% year to date and recently refreshed record highs of 5,767.

Chart Created by TradingView

Regarding the USD, as per the US Dollar Index, recent presidents saw the currency largely outperform under Democrat leadership and underperform under Republican administrations. Year to date, the US dollar is down -0.3%.

Chart Created by TradingView

It is important to understand that several factors drive market performance; relying on a sole variable to establish investing decisions is seldom recommended. During some election years, economic performance took on more of a primary role in terms of market returns, while in others, it took a back seat, and elections were in focus.  

How to Trade the US Election?

CFD (‘Contracts for Difference’) trading allows you to speculate on the price of an instrument without taking direct ownership of it: you can ‘Buy’ if you think the price will rise or ‘Sell’ if you think it will fall. 

With FP Markets, you can trade various asset classes around election time via CFDs on key US market indexes, such as the S&P 500 and the Nasdaq, US Treasuries, as well as the USD. 

1. Open an FP Markets Trading Account. 

Visit the FP Markets homepage and click the ‘Open Live’ button to start the application process for your live trading account. 

2. Download your preferred trading platform and start navigating the global markets.

With FP Markets, you can choose from various platforms, including MetaTrader 4 (MT4), MetaTrader 5 (MT5), TradingView, and cTrader, and access over 10,000 CFD instruments.  

3. Keep up to date with election news and developments.

The FP Markets Research Team will continue to monitor market movements and keep you updated on any significant developments.

4. Place your trade and monitor your investment.

Consider your investment goals, risk tolerance and investment strategy during the election period, and stay informed about individual assets and overall market conditions before you Buy/Sell CFDs.