Weekly outlook: “Positioning for Trump's second term”

November holds two major events that could make waves on the stock markets: the US election and the US Federal Reserve decision. The uncertainties are likely to lead to significant fluctuations, it is said.

4 November, 2024 FRANKFURT (Frankfurt Stock Exchange). This week, all eyes are on the US with the election on Tuesday and the Federal Reserve meeting on Thursday. “It is still a neck-and-neck race in the presidential election and also with regard to the majorities in the Senate and the House of Representatives,” notes Ulrich Kater from DekaBank. In such tight circumstances, it could well be that a few days will pass before the election results are clear. “This uncertainty could lead to increased fluctuations on the capital markets.”

Suspense feared

According to Claudia Windt from Helaba, an inconclusive election result could also lead to a recount being legally enforced. “This would paralyze US politics for the time being - both internally and externally.” A presumably very noisy hanging game would begin. “Such a phase of uncertainty is likely to pose the greater risk from the financial markets' perspective, which could then trigger further safe-haven shifts into gold and bonds,” says the analyst.

The DAX stood at 19,257 points on Monday morning after closing at 19,255 points on Friday. The data from the USA is good. There, the S&P 500, Dow Jones and Nasdaq started the weekend with gains on Friday. 

“Even if Harris wins the election, there is no need to fear for the US stock market”

According to Robert Halver from Baader Bank, investors are positioning themselves for a second term in office for Donald Trump. “His economic agenda of deregulation, tax cuts and increased protectionism while continuing to pursue a lively debt mania to promote the national economy is going down well on the stock market,” explains Halver. But even if Kamala Harris wins the election, there is no need to fear for the US stock market - she will also pursue economic stimulus. “Hostility to the economy doesn't stand a chance in America. And her tax hike and regulation measures must pass Congress, where they will be shaved.”  

Fed likely to continue cutting interest rates

A further interest rate cut is firmly expected for the Fed's upcoming meeting on Thursday, mostly by 0.25 percent. The weak labor market data on Friday has not changed this, according to DZ Bank: “In the US, employment growth collapsed in October. However, this is mainly due to strikes and storms,” explains Alexander Buhrow. The Fed will not be tempted by the special effects to make a major interest rate move. “We assume that the monetary authorities will lower key interest rates by 25 basis points.”

The reporting season also continues. In Germany, DHL, Commerzbank, Fresenius, BMW, Munich Re and Rheinmetall, among others, are opening their books. In the USA, Berkshire Hathaway, Qualcomm and Airbnb will be reporting.

Important economic and business events of the week

Tuesday, 5 November

USA: Presidential and congressional elections. The polls see a neck-and-neck race between Kamala Harris and Donald Trump with a slight advantage for Trump. The future majorities in the Senate and House of Representatives are also unclear.

Thursday, 7 November

8.00 am. Germany: Industrial production September. Production is likely to have fallen by 2 percent compared to August, according to Commerzbank. This is supported by the continuing gloomy mood. In addition, the strong increase of 2.9 percent in August is partly due to special effects.

13.00 pm. Great Britain: Interest rate decision by the Bank of England. The central bank is likely to cut its key interest rate for the third time by 25 basis points to 4.75 percent, says DekaBank. The latest data supports this. Inflation fell more sharply than expected in September and fell below the 2 percent target for the first time in three years. In addition, wage growth is slowing and sentiment indicators point to a slowdown in economic growth.

8. 00 pm. USA: Interest rate decision by the US Federal Reserve. Due to the US election, the interest rate decision will take place a day later than usual. According to DekaBank, the majority expect a cut of 25 basis points to between 4.50 and 4.75 percent. The macroeconomic projections will not be updated again until December, and the changes in the statement are also likely to be negligible.