Stock Market Focus: After the Election Watch These 4 Key Things!

What is the market going to do after the election?

This is the question of which everyone wants the answer and the answer is nowhere to be found. As we know with all things in our financial markets, there are many opinions but of course when we’re talking about future events, all opinions are speculative at best.

From what I’ve read of the presidential candidates, there are four key areas of our financial markets that will be affected as a result of our upcoming election. They are international business relations, health care, taxes and consumer discretionary (optional) spending. Here’s a few points to consider on these four areas.

With a republican presidential win, we should keep our eyes on the implementation of international agenda items from Trump. If he honors his promises to reform international trade by withdrawing from the newly signed Trans-Pacific Partnership, renegotiating NAFTA (North American Free Trade Agreement) and other seemingly impactful measures, this is likely to cause a negative impact to our international trade relationships. In this case it will be noticed mainy by large cap US companies since they are more likely than mid and small cap companies to have multi-national operations.

Based on campaign promises from both Hillary Clinton and Donald Trump, there will be adjustments of some kind to the Affordable Care Act. As with the 2010 implementation of this health care reform, many health care business including insurance providers, pharmaceutical and medical device companies will be impacted by any changes that are made to this health care law. The implementation of this act caused an increase in the healthcare market sector. The nature of the next reform changes will dictate the overall effect of the stocks that comprise this market sector.

Taxes

Both candidates are communicating somewhat vague plans about what they are proposing to do about taxes. One thing for sure is that tax reform is one of the subjects on the table as it is for every presidential election. If the wealthy are taxed more, consumer spending could decrease. In opposition to this, a tax cut could increase consumer spending. In a related conversation, higher minimum wages could eat into the profits of restaurants and retailers whose workforce is likely to be made-up of workers at this earning level.

Spending for indulgence and non-essential extras will be impacted if there is less money brought into the household or if there are price increases on necessities. This is the reason to be aware of potential tax and interest rate changes that come as a new US president takes office.

Again, no one truly knows how our financial markets will react to our 2016 presidential election. Watching the key areas discussed here will keep you on your toes and having a better understanding of post-election changes that we see in our US financial markets.

Stay tuned!

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