US Election Less Impactful for Equity Market Than Many Assume: RBC Survey

The forthcoming US election may not carry as much weight for the overall equity market as some investors might anticipate, according to a recent survey by RBC Capital Markets.

The RBC team highlighted that while the election is relevant to US equity markets, it may be less significant than perceived by some market participants. The survey included responses from 116 analysts across different sectors and was conducted from September 11 to September 20.

For numerous sectors, the importance of the election is considered neutral to slightly positive, especially when contrasted with broader economic influences.

A Republican sweep, particularly one under former President Trump, is viewed as moderately bullish. Sectors like Energy and Financials are expected to benefit the most in this scenario. Conversely, a Democratic sweep led by Vice President Harris is perceived to present a more bearish outlook, although these views remain mild.

When assessing sector relevance, Industrials, Financials, and Utilities are regarded as the most pertinent in the US. In contrast, sectors such as Consumer Discretionary and Information Technology exhibit only neutral to mixed perspectives.

Internationally, the election’s impact seems to be even less pronounced, with analysts from regions like Australia and Europe expressing minimal concern regarding the outcome.

Across all regions surveyed, 51% considered the election relevant (44%) or very relevant (7%). While the overall relevance score for the US was positive, it was still relatively mild at 0.7.

RBC also notes that the uncertainty surrounding the election could induce short-term market volatility. A Trump victory is considered a potential short-term boost for stocks, whereas a Democratic sweep could lead to a short-term downturn. Nevertheless, the firm stresses that the primary market concern is navigating past the event so that companies and investors can ascertain what lies ahead.