Stock Exchange: Ride The Record Highs, But Beware of Elections!

Stock markets experienced an impressive first half of 2024, breaking record after record. However, uncertainty looms as crucial elections approach in France and the United States, raising questions about the economic future. Stock market investors must remain vigilant in the face of potential political shocks that could disrupt these remarkable gains.

Stock Market, Growth, and Electoral Uncertainties

In 2024, the growth of stock markets has been meteoric. Indices such as the American S&P 500 have surpassed their peaks more than 30 times.

This momentum is explained by the economic resilience, particularly in the United States, and robust external demand in Europe, aided by unexpected Chinese growth, explains Capital.

The American unemployment rates remain historically low, at 4%, reflecting a strong economy despite high interest rates.

However, upcoming elections in France and the United States introduce elements of uncertainty.

In France, political surprises, such as the dissolution of the National Assembly, have already shown their ability to shake the CAC 40.

In the United States, the 2024 presidential election could change economic and regulatory policies, creating risks for stock market investors.

Persistent inflation and international conflicts, notably in Ukraine and Gaza, add an additional layer of potential volatility.

Artificial Intelligence and Stock Market Dynamics

Artificial intelligence (AI) continues to play a central role in the performance of stock markets. Tech companies, particularly those specializing in AI, have seen their valuations skyrocket.

Nvidia, leader in chips for generative AI, briefly surpassed Apple and Microsoft in market capitalization. Tech giants, nicknamed the “Magnificent Seven,” have significantly contributed to the rise of the S&P 500, with spectacular increases for Nvidia, Meta, Amazon, and Alphabet.

However, this concentration in a single sector raises questions. If massive investments in AI do not translate into sufficient profitability, stock market dynamics could suffer.

Potential regulations by competition authorities could also weigh on these companies.

At the same time, assets such as bitcoin (BTC), gold, and commodities like copper and cocoa have reached peaks, demonstrating the diversity of opportunities but also the risks in financial markets.

Faced with these multiple challenges and opportunities, stock market investors must navigate with caution, keeping an eye on upcoming political and economic developments.