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U.S. elections 2024: a new wave for equities?



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STOXX 600 up 0.5%

France shares cautiously rebound

Carrefour tumbles

S&P futures steady

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U.S. ELECTIONS 2024: A NEW WAVE FOR U.S. EQUITIES?

As we approach the 2024 U.S. elections, market watchers are beginning to consider the potential impact on U.S. equities.

It's widely believed that a divided government is probable, which could lead to a legislative gridlock that limits the fiscal policy impact on risk assets.

"Regardless of whether President Biden or former President Trump is elected, it's likely that control of Congress will be split between Democrats and Republicans," says a recent note from Barclays.

"This could lead to a standstill in enacting fiscal policies, including spending and taxes."

The corporate tax rate is another area of interest. The current rate of 21% is unlikely to change significantly, regardless of which party takes control.

However, there could be implications for S&P 500 EPS if there are shifts in this rate. A lower rate could be a tailwind, while a higher rate would be the opposite.

Trade is a murkier area, with the potential for increased tariffs, particularly under a Trump presidency. Such tariffs could negatively impact S&P earnings by around 2.6%, with an additional 1.2% hit from potential retaliatory tariffs from other countries.

Discretionary, Energy, Materials and Tech sectors are likely to feel the impact most, given their strong dependency on global supply chains, Barclays adds.

Inflation Reduction Act (IRA) tax incentives could also play a role in shaping the future of various industries.

"Clean energy beneficiaries of IRA tax incentives could face headwinds under a second Trump term," the note points out. "Impacted industries include Heating, Ventilation, and Air Conditioning (HVAC), Original Equipment Manufacturers (OEMs), EV auto OEMs, renewable energy, and industrial suppliers of grid equipment and services."

On the flipside, companies that are dependent on fossil fuels, including Internal Combustion Engine (ICE) auto OEMs, coal-based utilities, oil & gas producers/servicers, and industrial suppliers could see an upside in a second Trump term.


(Jesus Calero)

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TUESDAY'S OTHER LIVE MARKETS POSTS:

MOVE IN FRENCH BANKS "EXCESSIVE" - BARCLAYS CLICK HERE

CAUTIOUS EQUITY REBOUND CONTINUES CLICK HERE

EUROPEAN STOCKS POISED TO REBOUND FURTHER CLICK HERE

ALL ABOUT RATES CLICK HERE



Euro zone, French stocks suffer from political uncertainty https://reut.rs/3Rwubzw

Europe bounces for second day https://reut.rs/3z7wQJC

French banks https://tmsnrt.rs/3KQ4mqc

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