At the end of last month, China announced fresh measures to support its struggling economy. Chinese stock markets roared back to life but it’s too early to say whether these gains are sustainable.
Escalation of the conflict in the Middle East has been a tragic development. While the failure of peace efforts has cost even more lives, we’ve been asking ourselves what this means for commodity prices, supply chains and volatility in general.
But arguably the biggest event this quarter will be the US presidential election next month. I don’t need to tell you about its importance for the world. Our economists have been analysing multiple scenarios because the race for the White House is such a close contest.
Kamala Harris may lead in the national polls, but Donald Trump has advantages in the electoral college voting system and higher public approval on the economy. Our election prediction shows a 50% chance of either candidate winning but we have 5 specific scenarios addressed below.
Harris is proposing a more fiscally expansive policy platform, including tax credits for families and first-time house buyers, higher corporation tax and increased business regulation.
However, without a unified Congress, implementing much of Harris’ agenda is unlikely. We’ve assigned a 10% probability to this outcome. A Harris administration with a divided Congress – a 40% probability – may still pass a watered-down version of her agenda.
On the other hand, multiple versions of a Trump presidency exist, depending on the Congressional elections and his governing style. Much of Trump’s protectionist trade agenda can be passed with executive orders, allowing more scope for implementation.
Amid more uncertainty, we see a 25% probability of a trade war, 15% for a market-friendly outcome involving tax cuts and deregulation, and a 10% probability of a volatile scenario with both tax cuts and deregulation, but also protectionism and politicised monetary policy. We have summarised the 5 scenarios in the table below:
US electoral scenarios
Looking further afield, we actually remain optimistic about stocks and bonds over a 12-18 month horizon which is what our house view is looking at in our updates. We’ve also updated our positive outlook on real estate and as a hedge to the election outcome we have introduced a positive allocation to the US dollar. Here’s a summary by asset class:
abrdn House View
Source: abrdn, Oct 2024. The views expressed should not be construed as advice or an investment recommendation on how to construct a portfolio or whether to buy, retain or sell a particular investment.
In the October edition of the Investment Outlook, representatives of different asset classes once again highlight the latest developments within their investment universes.
James Thom revisits the white-hot Indian stock market and gives his four reasons why high valuations can still be justified.
The US presidential election and Federal Reserve interest-rate cuts will have a big influence on emerging markets. Viktor Szabo looks at potential scenarios and their effects on emerging market debt.
Craig Wright and David Scott examine how the logistics sector is transforming into a key player in the green energy and data revolutions.
On a related topic, Josh Duitz discusses the future of infrastructure investing. Spoiler alert: data and energy are key factors here as well.
Maximilien Macmillan takes a cross-asset approach to show you how bond market dynamics are shifting and what that means for your portfolio.
Finally, Robert Minter explains why gold is breaking records and what this tells us about the state of the world.
I hope you enjoy these articles.