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<ul class="summary-list"><li>Market analysts predicted choppy trading and sharp swings going into the US presidential election.</li><li>Donald Trump and Kamala Harris are locked in a tight race, fueling uncertainty among traders.</li></ul>Market analysts are braced for volatility ahead of Tuesday's presidential election as traders <a target="_blank" class="" href="https://www.businessinsider.com/the-trump-trade-stock-market-bonds-commodities-tariffs-fed-2024-7">shuffled their bets</a> on a Donald Trump or Kamala Harris victory.The Republican and Democratic candidates are neck and neck in many polls,<a target="_blank" class="" href="https://www.businessinsider.com/wall-street-election-predictions-professional-investor-survey-2024-11"> fueling uncertainty</a> in the finance world over who'll emerge triumphant, and clouding the outlook for everything from tax and trade policy to corporate regulation and geopolitics.One analyst underscored the<a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-trade-djt-bitcoin-harris-election-odds-betting-kalshi-polymarket-2024-11"> critical importance</a> of the election in research notes on Monday, while another touted economic fundamentals as more important to markets and predicted long-term investors would likely win over time. Meanwhile, the Federal Reserve is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11">cut interest rates</a> by 25 basis points on Thursday, while China's central bank is set to unveil some form of economic stimulus measures later this week. Here's a roundup of analysts' comments:<h2 id="b051a4d3-ca66-47f5-83ad-6b65851acac1">Naeem Aslam, chief investment officer at Zaye Capital Markets</h2>"US and European stock futures are trading flat as traders continue to focus on one thing and one thing alone, and that is the US elections. Basically, there is nothing else that matters; it is not going to be earnings that would move things in the markets, and it won't be the US jobs noisy number that would make traders think about the US economy. The only thing that is going to keep them occupied is the US election and who will become the next president of the most powerful country in the world."<h2 id="f123d804-bdf0-46b3-b1b2-46b4a53ef227">Joshua Mahony, chief market analyst at Scope Markets</h2>"A shift in the polls seen over the weekend signal the potential for a Harris victory in Iowa; with a surge in the older female demographic signaling a shift that many believe could carry Harris to victory. Coming at a time when markets appeared to have taken a Trump victory as a given, the polls are a timely reminder that betting markets may not be the best indication of who will become the President of the United States."The election looks significantly more of a contest than many had been expecting, which could provide a more protracted and volatile period ahead as we see potential recounts and challenges to potentially drag out this process."<h2 id="4192d8db-abfb-4db3-8486-f24c3eb9af7b">Principal Asset Management</h2>"Despite short-term volatility, historical trends reveal that equities have consistently posted strong gains by the end of a presidential term, underscoring the benefits of maintaining a long-term investment perspective. The drivers of market performance — economic growth, corporate earnings, and innovation — ultimately outshine the impact of political changes."Investors should take caution. Those who allow their political opinions to cloud their investing decisions could miss out on the potential rewards that come with staying invested in the market over the long-term."<h2 id="5a32ad08-8e3d-45d5-a08a-4420d2d2de45">Hal Cook, senior investment analyst at Hargreaves Lansdown</h2>"With the election being an effective coin toss, betting on a specific outcome doesn't seem sensible. Instead, remember that diversification is your friend."<h2 id="989e296a-dd0f-43f5-90c6-c0bd1cc6ef19">Kathleen Brooks, research director at XTB</h2>"The main US blue-chip index is up 20% year-to-date, which does not suggest that the market is seriously pricing in the risk of civic violence after this election, which could rock financial markets and cause a global wave of risk aversion."An interesting development leading up to this election is that financial markets expect Trump to win, and the Trump trade has performed well in recent weeks, as you can see in the chart below. The Trump trade is a stronger dollar, weaker bonds/ higher bond yields and stronger crypto. With one day left of this campaign, the dollar is falling, and the dollar index is at a two-week low. Thus, if Harris does win on Tuesday we could see a rapid unwinding of this trade, a sharp weakening of the dollar and intense volatility in the FX and bond market."We expect Monday and Tuesday to be quiet for markets, however, once we get the first drip feed of results on Tuesday night and Wednesday morning, expect fireworks."

Prepare for market volatility but don't panic trade, analysts say ahead of Election Day  

Buy these 39 quality stocks with rising earnings in a market with intriguing but imperfect parallels to the highly volatile fall of 2016

Stock markets all over the world, including Sensex, Nifty, Nikkei, and NASDAQ fell significantly today, as they reacted to weak US labor market data, with unemployment rates inching up to 4.3%, from 4.1% in July 2024. In response, the Nikkei 225 dipped around 4,451 points, witnessing the worst losses it has seen since 1987. On the other hand, the Sensex plunged over 2,000 points, and the NASDAQ also slipped 417.98 points. Nifty also closed the day at 24,055.60, down by 2.68%. Closer home, the D-Street mayhem wiped of Rs 15 lakh crore worth of investor wealth in a single day. While this might spook even seasoned investors, should this bloodbath drive you to exit the market, or is it time for you to go on a quality stock buying spree? Here's what the experts have to say <h2>Market corrections = Opportunities </h2>Vinnaayak Mehta, Founder, The Infinity Group, a personal finance consultancy says that given the current market downturn, it is important for investors to stay calm, and not make any hasty decisions. "Market corrections can offer opportunities to buy quality stocks at more attractive valuations. Investors should take this time to evaluate their portfolios, focusing on long-term goals and strong fundamentals rather than short-term <keyword id="19908008" type="General" weightage="20" keywordseo="volatility" source="keywords">volatility</keyword>. This period of correction may present a chance to reassess asset allocations and consider strategic adjustments", he says. <h2>Expect low returns in the short run</h2> Mr. Sandeep Bagla, CEO of Trust Mutual Funds advises investors to keep their return expectations low and realistic, at least in the short run. Invest only if you have a suitably long <keyword id="19895437" type="General" weightage="20" keywordseo="investment" source="keywords">investment</keyword> horizon. This will help you go through an imminent, upcoming market correction, along with helping you tide over periods of volatility in the interim. "Markets like India, where domestic economy is like more resilient than other economies, could be less affected in the mayhem. However, you should keep systematically investing in the stock markets, and not hit brakes on your investments. Stay invested to reap benefits from growth over the long term", he explains. <h2>Indians markets are relatively safe </h2>As per Siddharth Alok, AVP Investments, Multi Ark Wealth-Epsilon Money Group, investors should consider buying in these dips, but only if their investing horizon is over 3 years. "As valuations further rise, these sudden down moves might become more frequent. Equity markets returns are never linear. However, the direct impact on Indian markets remains limited; this can be seen from the overall relative strength that domestic markets are witnessing, while <keyword id="19908188" type="General" weightage="20" keywordseo="global-markets" source="keywords">global markets</keyword> are down 10-20%, Indian markets are hardly down 5% including today from their recent peaks", highlights Alok. <h2>Invested heavily in small and mid caps? Time to move </h2> During any market corrections, mid and small caps are the first in line of fire. Given that both of these segments are far more volatile, as compared to their stable, large-cap counterparts, the impact of a correction is far more visible on small cap and mid cap stocks. As Jay Shah, Founder &amp; CEO, Finwisor puts it, "when the markets are at rich valuations, the markets become fragile and look for opportunities to correct. The correction generally happens disproportionately-more in small caps and less in large caps". Amidst today's rout, while Nifty50, an index of India's top 50 companies by market capitalization stumbled about 2.68%, Nifty midcap 50 was down by 3.28%, while midcap 100 plunged by 3.55%. Going a step ahead, Nifty small cap 100, a larger universe of just small cap stocks, dipped by 4.57%. In such a situation, Shah suggests that long-term investors who are sticking to their asset allocation strategies should sit still, while those who are heavily invested in midcaps and small caps should move their investments large-cap stocks. And in case one is sitting on idle cash, this is a good time to start deploying their funds in the market.

Stock market crash: What should your next move be?

<keyword id="19895579" type="General" weightage="100" keywordseo="gold" source="keywords">Gold</keyword> consistently reduces portfolio <keyword id="19908008" type="General" weightage="20" keywordseo="volatility" source="keywords">volatility</keyword> while improving returns, even with increased <keyword id="20108512" type="General" weightage="20" keywordseo="allocation" source="keywords">allocation</keyword>. By simulating portfolio performance with varying allocations of gold (2.5% to 10%), it's evident that the yellow metal bolsters return without adding significant risk, according to the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>. On the other hand, <keyword id="19899404" type="General" weightage="20" keywordseo="bitcoin" source="keywords">Bitcoin</keyword> shows diminishing returns as its allocation increases. A 2.5% allocation of bitcoin can enhance risk-adjusted returns, but beyond that, the portfolio's volatility rises, leading to larger drawdowns and lower overall performance. The data underscores that while bitcoin may offer short-term upside, it introduces risk that erodes its effectiveness as a stable <keyword id="22820244" type="General" weightage="20" keywordseo="store-of-value" source="keywords">store of value</keyword>. Global equities experienced a sharp downturn, with the <keyword id="19919944" type="General" weightage="20" keywordseo="SP-500" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P 500" meta.hostid="261" meta.entityid="S&amp;P 500">S&amp;P 500</keyword> and <keyword id="19951906" type="General" weightage="20" keywordseo="NASDAQ" source="keywords" meta.keywordsubtype="org" meta.entityname="NASDAQ" meta.hostid="261" meta.entityid="NASDAQ">NASDAQ</keyword> dropping over 4% and 6%, respectively, at the peak of the selloff. Amid this volatility, the debate over whether bitcoin can be considered "digital gold" resurfaced, as investors re-examined its place as an inflation hedge and a store of value. While bitcoin enthusiasts often label the cryptocurrency as "digital gold," a closer examination of the data, particularly during turbulent market periods, challenges this claim. Gold, a time-tested asset known for its stability, has long been a <keyword id="20466459" type="General" weightage="20" keywordseo="safe-haven" source="keywords">safe haven</keyword> during <keyword id="22820245" type="General" weightage="20" keywordseo="market-downturns" source="keywords">market downturns</keyword>. Bitcoin, on the other hand, displays characteristics more akin to high-risk technology stocks, making it an unsuitable substitute for gold in times of market stress. The primary distinction between gold and bitcoin lies in volatility. On a five-year rolling basis, gold has proven to be far less volatile than bitcoin, a trend that underscores its role as a safe haven asset. Gold's stable value is supported by central bank holdings, long-term investment demand, and its status as a global store of wealth. Bitcoin, conversely, is at the extreme end of the volatility spectrum, with its price fluctuations resembling those of tech stocks--closely tied to blockchain adoption and innovation trends. The most recent market correction in early August 2024 further emphasized these differences. While bitcoin experienced sharp losses, gold remained relatively stable, reinforcing its value as a risk mitigator during crises. The comparison of year-to-date returns reveals the stark contrast: bitcoin's wild swings have made it less reliable for investors seeking protection in a turbulent market. Bitcoin and gold also show stark differences in their correlation with broader markets. Gold has historically exhibited a negative correlation during down markets, and a positive correlation during up markets, making it an ideal asset for a diversified portfolio. Bitcoin, on the other hand, behaves more like risk assets, amplifying market stress rather than mitigating it. This was especially evident during the Russian invasion of Ukraine in 2022, when gold outperformed while bitcoin faltered, aligning with other high-risk equities. Gold's global acceptance as a store of value--unrestricted by geographic or regulatory boundaries--provides further stability. Bitcoin, while growing in prominence, has not demonstrated the same universal acceptance or reliability, particularly during significant market downturns. The critical takeaway from the events of early August 2024 is that bitcoin has yet to demonstrate the same safe haven characteristics as gold. In times of significant market drawdowns, bitcoin has tracked risk assets like tech stocks, offering no meaningful protection for investors seeking stability. This reinforces the notion that bitcoin's most common use case is as an indicator of blockchain adoption rather than a dependable hedge against inflation or market turmoil.

Gold boosts returns and lowers risk, while Bitcoin heightens volatility, says World Gold Council

<ul class="summary-list"><li>A blockbuster jobs report raises the stakes for upcoming inflation data, BofA analysts say.</li><li>The analyst predicted that an upside surprise to September CPI would stoke fresh volatility. </li></ul>The September jobs report was good news, but it gives investors more reason to brace for the next inflation reading, Bank of America analysts say.The analysts say last week's blockbuster jobs report puts more pressure on this week's consumer price index data, with a big surprise to the upside now more likely to usher in a wave of market volatility. They say the CPI reading, due Thursday, is "no longer a 'non-event.'""Following the blowout jobs report last Friday, we believe the importance of CPI this week has risen," the analysts said in a Sunday note. "A sizeable surprise could bring uncertainty on the easing cycle and more volatility into the market."They note that options are pricing in a 109 basis point move, or a little over 1%, in the S&amp;P 500 on Thursday when CPI is released, compared to forecasts of a 91 basis point move last week. That would surpass the three-month average of a 70 basis point move on the day of a CPI release, and a move of that size would be the largest swing tied to a CPI report since May.On the bright side, the analysts say that stocks can withstand a slight upside surprise if it is tied to strong macro data. "Good news is good news for stocks as long as inflation doesn't flare up again," the analysts said, adding that historically, stocks and rates have moved higher when inflation moves lower, and lower when inflation follows an upward trajectory.Economists forecast the CPI report will show inflation continued to cool last month, rising 2.3% year-over-year compared to 2.5% in August.As inflation has edged back toward the Fed's 2% target, the central bank has grown increasingly focused on the labor market after years of fighting inflation. That <a target="_blank" href="https://www.businessinsider.com/fed-rate-cut-explained-inflation-labor-market-conditions-outlook-recession-2024-9">pivot</a> was behind the central bank's decision to deliver a jumbo 50 basis point rate cut last month, the first cut in four years. However, with the blockbuster September jobs report, some economists say <a target="_blank" href="https://www.businessinsider.com/inflation-outlook-fed-interest-rate-cuts-jobs-report-us-economy-2024-10">inflation is still a concern.</a> If this week's CPI data surprises to the upside, the Fed could be forced to turn its attention back toward pricing pressures in the economy. "CPI for September will be a key data release. If prices rise faster than expected on top of the stronger labor data, chances for the Fed to skip the November meeting will increase," UBS economist Brian Rose said in a Friday note.The odds of a 50 basis point rate cut from the Fed next month <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-fed-rate-cut-outlook-november-labor-market-2024-10">slipped</a> from 33% to zero following the release of the September jobs report, according to the <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch tool</a>. Thursday's CPI reading will thus be a key indicator as investors anticipate the Fed's next move.The <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">September jobs report</a> blew past forecasts, with 254,000 nonfarm payrolls added compared to expectations of 150,000. The unemployment rate dipped from 4.2% to 4.1%.

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