Citigroup believes that if Trump wins the U.S. election, it could lead to a rise in U.S. stocks, but it would also be a good opportunity for "profit-taking." Despite optimistic market sentiment driving the S&P 500 index higher, the Citigroup team thinks the timing for a pullback is ripe. They hold an optimistic outlook for the U.S. stock market, expecting a rebound after the pullback. Analysis indicates that a Trump victory would be beneficial for economic growth and corporate profits, particularly benefiting the energy and financial sectors
According to the Zhitong Finance APP, based on betting conditions in the gambling market, former President Donald Trump, known as "the king of understanding," is likely to achieve final victory in next week's U.S. election. This could lead to a rise in the U.S. stock market. However, for the strategy team at Wall Street financial giant Citigroup, a significant victory for the Republican Party will be a strong signal to sell U.S. stocks in the short term.
Trump's victory is viewed as good news for the U.S. stock market by most analysts, as his proposal to lower corporate taxes could sustain corporate profit growth. However, Citigroup's strategy team believes that the "almost excessively optimistic sentiment" that has driven the S&P 500 index to rise for six consecutive months makes the timing for a correction increasingly ripe.
However, the Citigroup team is not pessimistic about the future of the U.S. stock market and emphasizes optimism about the rebound pace after a correction period. The team led by Citigroup strategist Scott Chronert wrote in a report on October 29: "Given the expected fundamental uncertainties in the scenario of Trump + a red sweep of Congress, we tend to be optimistic about any rebound after the U.S. presidential election."
The driving forces behind the S&P 500 index reaching historical highs mainly come from economic growth and corporate profit expectations. The recent shift in the gambling market to support Trump's comprehensive victory undoubtedly provides significant support for economic growth and corporate profits. Vice President Kamala Harris's potential tax-increasing policies are considered relatively pessimistic for the stock market. Most major polls show that the support rates for the two candidates are neck and neck, but bets in the gambling market on Trump's victory have reached extreme levels.
The most optimistic prediction for the U.S. stock market is a significant victory for the Republican Party—namely, Trump winning the presidential election while the Republican Party secures a majority in both the Senate and the House of Representatives. Analysts from the Royal Bank of Canada have stated that a significant Republican victory would greatly benefit the U.S. stock market, with the energy and financial sectors benefiting the most, while a significant Democratic victory could have a short-term negative impact on the U.S. stock market. Wall Street strategists generally believe that Trump's victory could lead to increased tariffs and reduced taxes, which would favor the U.S. stock market significantly outperforming European markets.
However, the analysis team led by Citigroup strategist Chronert believes that the policy tendencies of both candidates are gradually negative for fundamental fairness principles. The Citigroup strategy team sees the S&P 500 index as "fully valued" at its current level. However, compared to the pessimistic outlook of most Wall Street peers regarding the stock market after a Harris victory, Citigroup strategists are not pessimistic about the future of the U.S. stock market after a Harris victory and emphasize that any sell-off resulting from a Harris win and a divided Congress will create good buying opportunities