Stock market performance in 2024
As the end of 2024 approached, stock markets performed better than initial expectations. The growth was double-digit for almost all the price lists, with the Italian index standing out as the best among the European ones. This scenario has led many investors to wonder if it’s time to make profits or continue to hold their positions. The answer to this question depends on various factors, including the US elections, which will be held on November 5
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Impact of the US elections on the markets
The elections in the United States represent a crucial element for the future of the stock markets. Short of a landslide victory, the outcome could take weeks to define, creating uncertainty and volatility. However, regardless of the winner, the uptrend may remain intact, as the candidates’ programs have significant similarities. It is therefore essential to monitor the sectors that could benefit from a change of administration
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Promising sectors based on election results
If Donald Trump were to win, the most promising sectors would include energy and fossil fuels, aerospace and defense, real estate, infrastructure, technology, finance and telecommunications. On the contrary, a Democratic victory could favor renewable energy, healthcare, the pharmaceutical industry, infrastructure and consumer goods. It is clear that Europe, in particular export-oriented countries, will be impacted by US decisions
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Macroeconomic prospects and interest rates
In addition to the elections, the macroeconomic outlook suggests a possible reduction in interest rates, with the European Central Bank (ECB) having to intervene more decisively than the Federal Reserve. This environment favorable to low rates could benefit sectors such as utilities and technology companies, which tend to thrive under such conditions. However, the European technology sector, linked to the automotive industry, has shown disappointing performance so far
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Final thoughts on the sectors to be monitored
The banking sector has demonstrated resilience, outperforming the market over the past two years, despite forecasts of falling rates. Current valuations still offer opportunities for growth. However, it is advisable to take a cautious approach to the industrial and automotive sectors, suggesting waiting until 2025 for a more in-depth analysis. In this context, investors should remain vigilant and ready to adapt their strategies based on economic and political developments
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