November Market Digest: Effects of the US elections and Santa Claus rally
November stands to be a crucial month for investors due to various events likely to influence the market environment. Below is a close analysis of these potential moments.
1. US Elections
Election Outcome and Policy Implications:
● The outcome of the November 5th elections could potentially change fiscal policies affecting healthcare, defence, clean energy, and technology industries and sectors.
● Forecasted Market Impact:
- In the event of a Democratic (Kamala Harris) win, industries like renewable energy and infrastructure could see a boost, with renewable stocks potentially rising 2% - 3% in response to favourable policy outlooks.
- A Republican (Donald Trump) win could favour oil and gas shares, with a 1% - 2% price increase forecast as energy policies focus on conventional fuel production and reduced environmental regulations.
Market Volatility:
● The November election month has historically seen a 1.5% - 2% increase in market volatility, according to the CBOE Volatility Index (VIX).
● In the five trading days after the last three midterm elections, the S&P 500 averaged a 1.2% gain as investors responded to decreased uncertainty.
● 2024 Forecast: If a clear win is confirmed, we should expect a 1% - 1.5% post-election rally in the S&P 500, assuming no extreme policy surprises.
2. Seasonal Market Trends
Holiday Retail Season:
● November kicks off the biggest shopping period, with Black Friday and Cyber Monday sales expected to hit $40 billion in the US, a 5% increase from 2023.
● Retail shares could see increased attention, especially e-commerce and consumer electronics, with an anticipated 2% - 3% month-over-month increase for leading companies.
Historical Market Strength:
● The “Santa Claus rally” has historically lifted share prices an average of 1.3% in November, according to data from 1928 - 2023. The positive momentum often continues into December, as year-end optimism boosts equity prices.
With the 2024 US elections on the horizon, market participants are gearing up for heightened volatility. The deeply polarised political climate and critical issues at stake suggest that financial markets may react sharply to election-related developments.
Disclaimer:
*Any opinions, views, analysis or other information provided in this article is provided by BCS Markets SA trading as BROKSTOCK as general market commentary and should not be viewed as advice according to the FAIS Act of 2002. BCS Markets SA does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information provided by third parties. You must rely upon your judgement in all aspects of your investment decisions and all decisions are made at your own risk. BCS Markets SA and any of its employees shall not be responsible for and will not accept any liability for any direct or indirect loss including without limitation any loss of profit which may arise directly or indirectly from use of the market commentary. The content contained within the article is subject to change at any time without notice. BCS Markets SA is an authorised financial services provider FSP No. 51404.
** This article was prepared by BROKSTOCK analyst Maboko Seabi
Read also
BCS Markets SA (Pty) Ltd. is an authorised Financial Service Provider and is regulated by the South African Financial Sector Conduct Authority (FSP No.51404). BCS Markets SA Proprietary Limited trading as BROKSTOCK.
The materials on this website (the “Site”) are intended for informational purposes only. Use of and access to the Site and the information, materials, services, and other content available on or through the Site (“Content”) are subject to the laws of South Africa.
Risk notice Margin trading in financial instruments carries a high level of risk, and may not be suitable for all users. It is essential to understand that investing in financial instruments requires extensive knowledge and significant experience in the investment field, as well as an understanding of the nature and complexity of financial instruments, and the ability to determine the volume of investment and assess the associated risks. BCS Markets SA (Pty) Ltd pays attention to the fact that quotes, charts and conversion rates, prices, analytic indicators and other data presented on this website may not correspond to quotes on trading platforms and are not necessarily real-time nor accurate. The delay of the data in relation to real-time is equal to 15 minutes but is not limited. This indicates that prices may differ from actual prices in the relevant market, and are not suitable for trading purposes. Before deciding to trade the products offered by BCS Markets SA (Pty) Ltd., a user should carefully consider his objectives, financial position, needs and level of experience. The Content is for informational purposes only and it should not construe any such information or other material as legal, tax, investment, financial, or other advice. BCS Markets SA (Pty) Ltd will not accept any liability for loss or damage as a result of reliance on the information contained within this Site including data, quotes, conversion rates, etc.
Third party content BCS Markets SA (Pty) Ltd. may provide materials produced by third parties or links to other websites. Such materials and websites are provided by third parties and are not under BCS Markets SA (Pty) Ltd.'s direct control. In exchange for using the Site, the user agrees not to hold BCS Markets SA (Pty) Ltd., its affiliates or any third party service provider liable for any possible claim for damages arising from any decision user makes based on information or other Content made available to the user through the Site.
Limitation of liability The user’s exclusive remedy for dissatisfaction with the Site and Content is to discontinue using the Site and Content. BCS Markets SA (Pty) Ltd. is not liable for any direct, indirect, incidental, consequential, special or punitive damages. Working with BCS Markets SA you are trading share CFDs. When trading CFDs on shares you do not own the underlying asset. Share CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail traders accounts lose money when trading CFDs with their provider. All rights reserved. Any use of Site materials without permission is prohibited.