Goldman Sachs analysts have highlighted that the outcome of the upcoming U.S. election could significantly influence investment strategies, with many clients now factoring political developments into their market decisions.
In a recent client note, Goldman Sachs suggested that if investors anticipate a Donald Trump victory in the presidential race and a Republican-controlled Congress, they should consider focusing on an index tracking stocks that typically perform well under Republican policies.
On the other hand, if investors expect Kamala Harris and the Democratic Party to win in the November 5 election, the analysts recommend investing in the firm’s index that reflects Democratic policy-driven outperformers.
Goldman Sachs further noted that its Republican-leaning stock tracker has shown a high sensitivity to election-related events. Should Trump’s odds of victory increase to 100% on the PredictIt prediction market, this index could rise by 8%, the analysts explained.
“Throughout the summer, investors have actively adjusted their portfolios in response to election developments, often reversing trades shortly after,” the analysts commented.
As the November election nears, Harris maintains a slight lead over Trump in national polls, a margin she’s held since entering the race in July. However, polling in seven key battleground states remains extremely tight, making the race for the presidency far from certain.
Key states like Nevada, Wisconsin, Pennsylvania, and Michigan show Harris with a slim advantage, while Trump holds narrow leads in Georgia, North Carolina, and Arizona, according to data from FiveThirtyEight and ABC News. With 270 Electoral College votes needed to secure the presidency, these battleground states are expected to play a critical role in determining the election’s outcome.
