Goldman Sachs (GS) is signaling confidence that market fears over delayed results from the upcoming U.S. presidential election may be overstated. A team of strategists led by Michael Cahill noted that while some uncertainties remain, factors such as modernized vote-counting processes and polling margins suggest a clearer outcome than many investors expect. According to Goldman, these improvements should allow financial markets to quickly reflect the likely winner, potentially by election night or early the following morning.
This perspective is bolstered by analyses of past elections, where currency volatility spiked during Tokyo trading as initial vote tallies emerged. In 2016 and 2020, the bank found that most FX market turbulence occurred within the first few hours, often stabilizing by the end of the day. Such patterns underscore Goldman’s confidence that any turbulence will be short-lived, even in the event of a closer contest in battleground states.
Market Overview:- Goldman expects a timely reflection of likely election results in markets.
- Past FX volatility mostly settled within hours after initial vote tallies.
- Investors may be overestimating the risk of delayed outcome-driven volatility.
- Modernized state-level vote processing may reduce delays significantly.
- Key county-level results drive early currency market reactions.
- Most FX volatility in prior elections concentrated in Tokyo trading hours.
- Goldman forecasts stable markets post-election, barring extreme outcomes.
- FX and other markets likely to adjust quickly as results become clear.
- Investors encouraged to focus on long-term fundamentals post-election.
Goldman’s measured approach provides a reassuring perspective for global investors anxious over election-driven volatility. The bank suggests that while a tight race might prolong tension, robust changes to the vote-counting process could reduce the likelihood of prolonged market instability. A stable transition could, in turn, keep the broader economic outlook intact, with markets prepared to revert to typical trading patterns within a day.
In conclusion, Goldman's analysis presents a picture of resilience in financial markets, with investors urged to maintain composure. By closely monitoring initial county-level results, traders can gain insights into the election outcome and anticipate a swift return to normalcy. This measured outlook suggests that the 2024 election may not disrupt markets as some fear, provided early indications align with anticipated results.
