Regardless of which candidate wins next Tuesday’s U.S. presidential election, experts say investors will be relieved to allay some uncertainty about what types of policies to expect.

But macroeconomic factors such as interest rate cuts and geopolitical tensions will have a far greater influence on markets in the coming year than the election outcome, they believe.

“What we’re really looking at … is which candidate can play a more crucial role in economic growth,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.

Democratic candidate Kamala Harris’ promises focus on national competitiveness, particularly in the areas of renewable energy, semiconductors and infrastructure, Gardner said.

It is likely to maintain current trade policies and stability, Gardner added, and this could lead to more stable profits for companies. However, there has been talk of a potentially weaker U.S. dollar under Harris, which Gardner said could lead to some inflation in the short term.

On the other hand, Republican candidate Donald Trump will likely cut taxes, particularly corporate taxes, which will boost profits, Gardner said. Sectors like oil and gas or banking are expected to prosper under Trump thanks to tax cuts and deregulation, she said.

However, Trump also said he would broadly raise tariffs, including a proposed 60 percent rate on goods from China and a tariff of up to 20 percent on all other imports.

“Tariffs are the greatest thing ever invented,” Trump said in September.

Although there is usually some volatility in the markets before elections, the outcome does not appear to be a disaster for investors, said Michael Currie, senior investment advisor at TD Wealth Management.

“Depending on the sector, the field in which you operate, you will have a favorite.”

While Trump may be pro-business and focused on cutting red tape and taxes – and markets performed well during his last presidency – Harris appears less concerned when it comes to geopolitical risks , said Mona Heidari, senior financial advisor at BlueShore Financial.

This “helps to strengthen investor sentiment and confidence in investing in the stock market,” Heidari said.

In a conference call to discuss Gildan Activewear Inc.’s latest results, Chief Executive Officer Glenn Chamandy said Thursday that tariffs affect costs and can create inflation, but it remains unclear what effect they would have. overall. He said he is optimistic that Gildan will not be disadvantaged.

“If tariffs come into effect, they will apply to everyone, so we will be in the same position as today,” he told investors on the call.

Higher government spending — something both candidates are likely to do — can have an inflationary effect, making price growth more difficult, said Kevin Headland, chief investment strategist at Manulife Investment Management. The same goes for tariffs and tax cuts, he added.

A mid-October TD Economics report said Democrats “enjoy a historic advantage in stock market performance” but that likely reflects the state of the economy when they take power.

Currie pointed out that the health care sector typically performs worse in U.S. election years, and this time around is no exception. Both parties like to say before elections that they will fight big pharma and insurance companies, but their promises are usually overblown, he said.

Given that the United States is Canada’s largest trading partner, any changes in trade relations between the two countries could be concerning, Headland said.

“If we are in a weaker economic environment in Canada, the loss of some demand for our products could further exacerbate the weakness of the Canadian economy,” he said.

“If former President Trump takes office, there could be some uncertainty.”

Experts say there is always volatility in the markets in the run-up to an election, but there aren’t necessarily any major moves ultimately.

“It’s surprising how little effect elections have on markets,” Currie said. But “it’s usually a big story.”

Markets tend to be a little calmer but remain positive during an election year, while they often rise more than average in the year after an election, Gardner said.

“Markets don’t like uncertainty. They don’t like not knowing,” she said.

“Some sectors will obviously benefit, but the markets are still going up at least 12 months later, and that’s because they know who the president is. They know what to expect in the market, and favorable changes are coming from two sides.

This report by The Canadian Press was first published November 1, 2024.