Analyst views of US election results impact on markets, economic sectors

They expected that the Gulf markets will witness fluctuations during this period due to the results of the US elections, until the picture becomes clearer. They also defined the sectors that will be positively or negatively affected by the victory of one candidate over another.

Impact on GCC Markets, Stocks

Tareq Al-Rifai, CEO of Quorum Center for Strategic Studies, said that capital markets may witness significant fluctuations following the US elections, especially if there is no decisive victory by the end of Tuesday, adding that the lack of clarity in the results may continue for a day or more, which will be reflected in increased market volatility until the picture becomes clear.

Mohammad Makni, Professor of Finance and Investment at Imam Muhammad ibn Saud University, stated that Trump’s victory may have negative effects on the GCC economies, as he focuses on enhancing local energy production, regulating the oil and gas industry, and encouraging liquefied natural gas exports, which may strengthen the US energy sector and negatively affect the Gulf economies that depend on oil and gas.

As for the impact on stock markets, Makni explained that there is a positive relationship between the capital markets in the Gulf and the US markets in a number of previous election cycles, as the Republican victory is considered supportive of stock prices due to their policies that boost corporate profits, while the Democratic victory tends to negatively affect stock prices due to their focus on redistributing wealth.

Makni confirmed that investors in the GCC markets tend to benefit from Republican policies that support companies and profits.

In contrast, Al-Rifai added that Trump’s previous presidency had a positive impact on capital markets, especially in Saudi Arabia, suggesting that Trump’s re-election could boost the oil sector and related sectors, making it a better economic option in the medium term, while capital markets are still divided over who will win, and the final picture is not yet clear.

Expected impacts on some sectors

Wael Makarem, Chief Market Strategist at Exness, said the renewable energy and environmental sustainability sector tends to favor Harris due to her climate-focused policies, while traditional energy sectors support Trump for his backing of these industries.

Makarem added that the construction sector is split in its support, as Harris advocates affordable housing initiatives, while Trump emphasizes the development of federal lands. Additionally, the technology sector leans to back Harris due to her alignment with the current development policies in artificial intelligence and worker protection, while Trump’s approach prioritizes deregulation and free speech interests in this field.

Post-election volatility and hedging strategies

Makarem said capital markets could experience significant volatility following the US elections due to the intense competition between candidates, coupled with anticipation surrounding the Federal Reserve’s decision on interest rates.

He pointed out that the CBOE Volatility Index has recently moved up, reflecting market expectations of disruptions. Thus, many investment institutions started implementing hedging strategies to protect their portfolios, such as purchasing protective options on stock indexes to avoid potential losses from political fluctuations.

Makarem highlighted that Trump's victory could increase volatility in global markets, with inflationary pressures likely due to proposed tariffs and tax cuts, prompting investors to shift toward safe-haven assets like gold and triggering a sell-off of US government bonds. Meanwhile, Harris' win could offer greater economic stability, allowing markets to move in line with natural supply and demand forces.

Impact of Commercial Policy and Dollar Strength

On the commercial front, Makni said that Trump's policies toward China aim to reshape global trade routes, which could lead to a slowdown in the Chinese economy due to trade tensions and reduce Chinese demand for GCC oil. This, in tun, will negatively impact oil prices and regional economies.

He explained that Trump's imposition of tariffs might back the US dollar by lowering spending on foreign goods, thereby strengthening the GCC currencies pegged to the dollar, such as the Saudi riyal.

Makni noted that this impact on financial markets strengthens the dollar, which may reduce the competitiveness of GCC non-oil exports. Meanwhile, the GCC regional investments may benefit from market fluctuations and a weaker dollar, thus become more attractive.

Elsewhere, Makarem added that Harris clean energy policies could reshape the global energy landscape, indirectly impacting markets, including the GCC region, by reducing global demand for fossil fuels.

Trump’s support for fossil fuels might pressure oil prices, negatively affecting the GCC economies that rely on oil revenues. Meanwhile, actions aimed to resolve conflicts in the Middle East could positively enhance GCC market sentiment, including the Saudi market.

On the other hand, Makni added that the GCC investments in the US could be affected by the candidate's policies toward the Middle East, including the Iran nuclear deal and other political issues, which may reshape economic and political relations.