From Nasdaq:

The 2024 presidential election is well underway, with the Iowa caucuses taking place last week and the New Hampshire primary happening recently. Meanwhile, the impact of elections on markets is already being felt, despite the actual election not occurring until November.

Different candidates mean different policies, which in turn means different impacts on the economy and markets. For example, certain sectors and asset classes are expected to perform better under one candidate, while others may suffer.

Election years typically see lower returns and higher volatility, with average equity returns being about half of what is seen in non-election years. Equity volatility increases by 25% in the months leading up to the election and then drops nearly 20% after the election.

While elections do impact markets, macroeconomic factors like recession and expansion also play a significant role in post-election returns. For example, the economy being in or around recession during the initial election tends to lead to negative returns, while being in a period of expansion tends to bring about positive returns.

The impact of elections on IPOs is also influenced by macroeconomic factors. While there may not be a clear relationship between elections and IPOs, macro factors like recessions and interest rate hikes have had a noticeable effect on IPO activity.

Overall, while elections do matter to markets and IPOs, macro factors also play a crucial role. This year, markets and IPOs are expected to be helped by the anticipated soft landing and Fed rate cuts.



Read more: Elections, Markets and Macro | Nasdaq