What to track as the US presidential election nears

With Super Tuesday behind us, it seems to be increasingly more clear that we will see a Trump vs. Biden rerun. And while we still haven’t seen the political programmes on which the two candidate will base their campaign, and thus don’t know how they will impact the economy specifically.

Still, there are some indices and ETFs that are relevant to track as we get increasingly closer to Election Day on 5 November. We have listed some of those here and below you find a short explanation of why these are relevant.

Indices:

• Nasdaq 100: The American tech-heavy index is the most sensitive to perceived economic changes from the US election.
• STOXX 50: The European top-index is worth paying attention to as especially with a shift in power to a Trump administration could mean lesser global support from the US, meaning increasing trade tariffs and e.g. a lack of defensive support on the European continent.
• Hang Seng: The Chinese index could be challenged if Trump takes power, as he could intensify the disputes between the US and China.

Thematic ETFs

If you want some inspiration that is slightly more specific than broader, regional indices, here’s a few topics to dive into depending on the political focus of the two candidates and the eventual winner.

• US small caps (Xtrackers Russell 2000 UCITS ETF): Depending on the politics that either presidential candidate will present, it could be more or less business-friendly than the current regime. As small caps usually operate with smaller financial cushions, changes in the business-friendliness of politics in terms of e.g. taxes, tend to have a greater impact here than for large and mega cap companies.
• EU defence (Future of Defence UCITS ETF): While US presidential elections most often have been revolving around national policy making, it seems that there’s a chance that the US’ contribution to peace and stability across the globe may be a factor in 2024. As especially the Republican camp is questioning US’ foreign policy role (and even NATO membership) a seat change in the oval office may mean that Europe needs to ramp up its military ability to defend itself, which may mean good times for the European defence industry.
• US oil & gas majors (iShares S&P 500 Energy Sector UCITS ETF) and Clean energy stocks (iShares Global Clean Energy UCITS ETF): Another battlefield in the election campaign may turn out to be within fuel and energy. Without knowing the details of either party, there is a tendency for the Republican party to favour traditional energy sources like oil and gas, whereas the Democratic party has a stronger focus on the green transition. So depending on the result, these two ETFs may be impacted.