Trump or Harris: Close fight makes Dow Jones jittery after best YTD rally in an election year

FILE PHOTO: Democratic Vice President Kamala Harris and Republican opponent former U.S. President Donald Trump are seen in a combination of file photographs taken in Chandler, Arizona, U.S., October 10, 2024 and in Evans, Georgia, U.S., October 4, 2024. REUTERS/Evelyn Hockstein and Octavio Jones/File Photo

Voting for the US Presidential election is just hours away, and investors are bracing for near-term caution across asset classes with the Dow Jones Industrial futures below the 42,000 level on November 5. Adding to the jitters is the latest and final poll by NBC News, that shows a neck-and-neck contest for the White House, with both candidates getting support of 49% voters each, with 2% voters undecided about their choice.

Ian Bremmer, President and Founder of Eurasia Group, a geopolitical risk advisory firm told ANI in an email interview on Tuesday that no result would surprise him, and he is considering Trump as the "very narrow favourite" right now. "We view Trump as the very narrow favourite in this race, but this is a low-conviction view, reflecting the closeness of polling and polls over the weekend that showed him surprisingly weak in Republican-leaning states."

Read More: US presidential election - When and where to watch results from India

US Stocks At Record Before Poll

The year 2024 has turned out to be the best election year till October since 1936, with S&P 500 higher by around 19% so far this year, registering record highs. The last two US elections have also seen strong post-poll rallies too, clocking 5% and 15% gains between election day and the end of the year in 2016 and 2020, respectively, analysis from Bespoke Investment Group showed.

Previous Trend on Dow Jones

Ryan Detrick, Chief Market Strategist at Carson Group posted on social media an analysis that showed S&P 500 closing higher on five out of six occasions during the last six US Presidential elections, with last three post-election years seeing double digit gains. The average gain a year after last ten elections has been 15.2%, with a higher close on 9 out of 10 occasions.

However, chartist Jai Bala of Cashthechaos.com told CNBC-TV18 that he is cautious on Dow Jones which may be looking shaky after having slipped sharply since the all-time highs of above 43,000 seen on October 21.

Over a four-year period after the Presidential Inauguration date, S&P 500 has ended up higher on most occasions, said a chart posted by Charlie Bilello of Creative Planning.

Threat of a Trade War

A note by Barclays is suggesting that should Donald Trump return to the White House, it could lead to a "full-blown trade war," and that may lead to China contemplating a larger stimulus package. China's National People's Congress (NPC) standing committee meeting is scheduled to wrap up on November 8, just days after voting.

The US Election, China's NPC meeting along with US Federal Reserve's meeting is among the three key factors this week, that may influence global equities.

Track the latest updates on the US Presidential Election right here on Moneycontrol.

Long Wait after Voting?

Associates of the Harris campaign have said that the election outcome may not be known for days. “We believe this race is going to be incredibly close. We may not know the results of this election for several days,” said Harris campaign chairwoman Jen O’Malley Dillon.

CNBC News quoted Amy Ho of JPMorgan saying that "uncertainty could linger on the outcome as the timeline for certifying election results could take days for the presidential race and weeks for the House races."

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