Chart beat: The spectre of US election and Donald Trump 2.0 puts equities under a cloud | Mint

As investors grapple with geopolitical tensions and ambiguity on interest-rate cuts by the US Federal Reserve, another risk looms – the upcoming US Presidential election. A survey in April by Bofa Securities showed that global fund managers see the US election as the third-biggest risk to their portfolios, with 12% of respondents expressing caution regarding this. In Bofa's February survey, it was at the fifth spot.

Global stock markets are likely to remain jittery until the election, scheduled for the end of the year, is completed. After all, developments in the US have repercussions for the global economic growth and political landscape. Analysts at Nomura Securities International say its reasonably likely the 2024 election will deliver a unified government, with a higher probability of this if Donald Trump wins.

A unified government usually paves way for smoother policy changes by the incoming administration. However, during Trump's term as president, stock markets worldwide experienced increased volatility, especially emerging market equities, thanks to his administration's aggressive trade policies. 

“In 2025, we get either Bidenomics 2.0 or Trump 2.0. In either case we are going to see more huge fiscal deficits, protectionism and industrial policy, but in the latter case, perhaps on steroids," read a Rabobank research report dated 24 April. Trump 2.0 could mean a USD and US asset meltdown, or a further USD and US asset spike and an emerging-market meltdown, the report added.