Uncertainty over the US election is not a reason to exit the market: UBS By Investing.com
Investing.com — As the US presidential election nears, UBS analysts believe investors should keep moving, stressing that market uncertainty is unlikely to disrupt the fundamentals of good equity.
Despite the potential for increased volatility in the coming weeks, UBS suggests that making dramatic portfolio changes based on election results may not be effective.
“Reducing equity exposure due to what investors may view as a ‘disappointing’ election result may not have positive long-term effects,” UBS noted.
They explain that historical data supports this view, as US equities tend to perform well in both the lead-up to and presidential elections, with gains recorded since 1928.
This showed strong momentum, recently closing at 5,854 and nearing its 47th high of the year.
UBS said the six-week market win reflected steady economic growth, with companies representing 15% of the S&P 500 market average reporting Q3 earnings so far—80% of which beat earnings estimates and more than 60% beat expectations. sale.
UBS analysts remain optimistic about the broader economic outlook, pointing to strong consumer spending, bank confidence, and continued demand for artificial intelligence technology.
With the Federal Reserve expected to continue cutting interest rates, UBS forecasts S&P 500 earnings growth of 11% in 2024 and 8% in 2025.
While policy changes following an election can have an impact on market behaviour, UBS stresses the importance of examining them in context.
“A potentially difficult market reaction to Donald Trump’s victory would be positive,” the note explained, as the risk of higher taxes and regulations would be reduced. However, tax concerns and deficits can derail any initial meeting.
Ultimately, UBS sees election uncertainty as part of the normal course of the market and encourages investors to maintain their positions, focusing on long-term fundamentals rather than political outcomes.
