[US Election 2024]
Wall Street Prepares for Extreme Volatility
As the U.S. presidential election approaches rapidly, Wall Street has begun preparations, including adding personnel, to brace for extreme volatility.
According to Bloomberg on the 3rd (local time), investment bank (IB) Goldman Sachs plans for hundreds of employees in its New York sales and trading teams to work late into the night. JP Morgan intends to deploy additional staff to handle overnight trading volumes and volatility in Europe and Asia on election day.
Bloomberg reported, "Traders across half of the financial industry on Wall Street are preparing to work overnight," adding, "Even British traders, who usually do not stay up during U.S. elections, will be monitoring market conditions such as currencies and interest rates."
The IB industry's preparation for “overnight work” on U.S. election day is largely due to the election race unfolding as an extremely close contest until the very end. There is a forecast that trades related to any candidate in the financial markets could change moment by moment until all votes are fully counted.
As former Republican President Donald Trump gains an advantage, the foreign exchange market could see a stronger dollar and weaker emerging market currencies, while oil and internal combustion engine companies may rise in the stock market. Conversely, if Democratic Vice President Kamala Harris gains ground, opinions on the dollar outlook diverge, but stocks of eco-friendly companies such as solar and wind power could experience an upward trend.
Wall Street expects market volatility to intensify the longer the presidential candidates delay declaring victory. There are also concerns that a refusal to accept the election results by a presidential candidate could shake global financial markets. MarketWatch reported that if the election results are not immediately clear, risk asset appetite may weaken.
Some Wall Street traders are more worried about the congressional elections than the presidential election. They hope for a “Purple Wave,” meaning that Republicans and Democrats split the seats. This could serve as a shield against the president’s radical policies. Bloomberg forecasted, "If the Republicans control both the House and Senate, the bond market could decline more sharply."
The recent soaring prices of gold and silver are analyzed to be due to strengthened safe-haven demand ahead of the unpredictable U.S. election.
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