Donald Trump has not yet been re-elected, but analysts are already speculating how his return could affect the global economy, geopolitics, and the S&P 500 and Nasdaq.
Some believe that his promise to “massively cut taxes” could bring relief to individuals and businesses after years of high rates, albeit at the price of hurting budget revenues.
Others worry that a return to the Trump era could mean a resurgence of trade wars, not only with China but potentially with Europe, which has traditionally been considered a U.S. ally.
To be sure, Brussels is preparing a two-step strategy to deal with Trump: offer a quick deal if he wins a second term and take targeted retaliation if he imposes harsh tariffs.
What about energy resource prices?
There is no clear answer as to what will happen. A Trump administration could negatively affect oil and gas prices with new trade tariffs.
Conversely, his policies could push oil prices higher if sanctions significantly cut Iranian production, possibly reducing it by around 1 million barrels per day.
If Harris wins, the outlook for commodities could be more bearish.
Her administration could prioritize climate policies, including reducing carbon emissions and boosting funding for renewable energy projects.
The main fear is that this change could result in higher compliance costs and stricter regulatory requirements for the oil industry, which could affect profitability.
However, the election is one of many factors to be taken into account. Apart from that, there is a state of economic growth in China, which is still struggling to get back on track.
As a consequence of the latter, the country's central bank surprised the market by cutting the medium-term lending rate to boost the economy, which pushed oil prices down.
Another critical factor supporting commodities will be geopolitics. While renewed tensions in the Middle East may not push oil prices to $100 per barrel, they could help prevent prices from falling below $70.
The bottom line is that to gauge potential commodity market movements; it is important to monitor not only the presidential election polls but also geopolitical developments and general economic conditions.
What to expect shortly?
In addition to keeping an eye on energy demand from major importers, everyone will be watching this week's central bank meetings. If the Fed signals a rate cut and the dollar weakens, we could see oil prices rise.