With only two weeks left until the highly anticipated 2024 US election results are revealed, recent polls and gambling odds show Trump leading again. Since the end of September, financial assets closely related to the election policies have collectively shifted towards 'Trump trades,' with the most typical being 'Trump concept stocks.' $Trump Media & Technology (DJT.US)$Please use your Futubull account to access the feature.$Phunware (PHUN.US)$ This month, they have surged by 117% and 148% respectively, benefiting from the rising trend of assets such as Bitcoin, Bit stocks, bank stocks, and the US dollar following Trump's policies since taking office.

For Wall Street, the quadrennial US political showdown is also a test for the financial markets. According to analysis by multiple professionals, the US election is currently considered the most turbulent event before the end of 2024, with market volatility expected to significantly increase.

In this scenario, traders are also starting to flock to defensive sectors to hedge against volatility. Regardless of Trump or Harris winning, these stocks may deliver decent performance and serve as a 'safe haven' for election trading.

Regardless of the winner, will these assets benefit?

Due to the huge uncertainty brought to the financial markets by the election, investors are seeking symbols that can benefit regardless of who is elected to hedge against the risks brought by the election fluctuations. In the US stock market, two sectors have recently shown such risk resistance - finance and utilities.

Since the beginning of this month, the S&P 500 finance index has increased by nearly 4%, making it the strongest performing sector among all industry sectors. Among them, banking stocks have performed the most outstandingly, and several major banks have reported excellent results for the latest quarter, with significant post-earnings increases and maintaining an upward trend, Wells Fargo & Co has risen nearly 16% within the month. $Wells Fargo & Co (WFC.US)$Please use your Futubull account to access the feature.$Morgan Stanley (MS.US)$ In the utilities sector, firstly, the industry has strong defensive attributes, coupled with the resurgence of the AI power generation concept, electric power stocks

including l several major banks reported excellent results for the latest quarter, with significant post-earnings increases and maintaining an upward trend, Wells Fargo & Co has risen nearly 16% within the month. $GE Vernova (GEV.US)$ In October, the rise exceeded 16%, followed by a well-known American power generation company. $Vistra Energy (VST.US)$The stock has risen by nearly 230% for the whole year.

Kurt Reiman, investment director of UBS Global Wealth Management, analyzed that traditionally, both the finance and utilities sectors tend to perform well under any government leadership. This is mainly due to the following two reasons:

1. Financial stocks are relatively undervalued in the US stock market, and have shown strong performance under Democratic government leadership recently. If Harris is elected, the current situation is likely to be maintained; if Trump takes office, his policy leans towards easing bank regulation. Therefore, regardless of the election outcome, the financial sector is expected to benefit.

2. The rise in utility stocks is driven by defensiveness and AI. Firstly, utility sector dividends are good, performance is reliable, a long-term choice for capital hedging; secondly, the recent booming development of AI in the past two years has stimulated the robust demand for electrical energy, causing electric power stocks to rise along with the AI trend.

In addition, gold, as a classic hedge tool, has frequently hit new highs amidst the intense election atmosphere and geopolitical tensions.

The US dollar and US bonds continue to fluctuate! Wall Street stands alert.

According to Citigroup's trackingImplied volatilityThe market currently considers the US presidential election to be the most turbulent event before the end of 2024, followed by the release of the October employment report on November 1st and the third-quarter earnings of the star chip manufacturer Nvidia.

Coincidentally, the creator of the US bond volatility index also pointed out that in the days following the US election on November 5th, there may be "historic volatility" in the US bond volatility. Harley Bassman created the Treasury market's expected volatility index, the MOVE Index, in 1994, which is derived from 1-month US Treasury bond options.Implied volatilitycalculated out.

As the election day enters its one-month window, the MOVE index soared from 100 to 124 on October 7th, marking the largest single-day fluctuation since 2020. Harley stated, " option pricesIt is expected that after the end of the election, the yield of government bonds at various maturities will fluctuate by about 18 basis points, making it one of the largest 'event days' I have seen in my career.

Looking back at November 2016, Trump's unexpected victory over Hillary led to a single-day fluctuation of 37 basis points in the 10-year US Treasury yield, the largest fluctuation level in over a decade, causing the financial markets to hold their breath. However, this expectation has emerged in recent market trends, with the 10-year US Treasury yield rising by about 60 basis points in nearly five weeks, stabilizing above the 4.2% mark, to some extent restraining the trend of risk assets.

Meanwhile, Wall Street institutions are also preparing for this volatility, with banks, brokerages, investment managers, and exchanges considering increasing staff to handle the high trading volume on and around election day. Jim Demare, market chief at Bank of America, stated that the day after the presidential election, trading volume often immediately rises. If this happens, it could add to the already record-breaking trading volume.

As of the first three quarters of 2024, the combined fixed income and stock trading revenue of the top five Wall Street banks (JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup) totaled approximately $89 billion, the highest level ever recorded for the same period.

Editor/new