Global markets will be shaken by U.S. election uncertainty, and investors should sit tight and not reposition as yet.
President Trump falsely claimed victory on Wednesday morning before all votes have been counted, he called the election a ‘major fraud on the American public’ and demanded no more votes be counted.
This would mean the outcome will be contested by the Democrats and could result in a lengthy, complex court battle, and also likely on the streets of America too.
This mammoth uncertainty within the world’s biggest economy will send some global stock markets into a tailspin as investors become rattled about a clear outcome taking longer to achieve than anticipated.
Indeed, a chaotic contested outcome is just what the markets didn’t want.
As it stands, the election is down to the wire and the result will shape global financial markets for years.
Coupled with the fact that both candidates for the White House have such different agendas on topics such as taxes, infrastructure spending, tech regulation, energy and stimulus to bolster the economy, investors should sit tight and not reposition their portfolios. Just yet.
Renewables, industrials and cyclical stocks will likely flourish under the Biden administration, whereas the oil and gas, financial and healthcare sectors, amongst others, would benefit from Trump staying in the White House.
The markets had priced-in a Biden win, which may still be the case, but more chaos is on the way before then.
History has taught us that stocks tend to go up, regardless of which party controls the White House, but how your portfolio is balanced matters.
As such, investors should ride out the temporary volatility until the outcome is clearer.
Nigel Green is CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.
photo: Erik (HASH) Hersman