UBS analysts maintained their election scenario probabilities despite the assassination attempt on former US President Donald Trump.
The shocking events that occurred on Saturday evening during a campaign rally left Trump wounded and are said to have resulted in the death of a bystander and critical injuries to two others. Trump was reported to be "fine" and was seen raising a fist to supporters after the attack.
UBS said the incident unfolded during a highly charged political atmosphere, just over two weeks after the first televised debate between Trump and Biden, which saw a rise in Trump's polling lead.
Analysts noted that assassination attempts on US presidents or candidates are not new, with four sitting presidents and one candidate having been assassinated in US history. The most recent sitting president to be wounded in an assassination attempt was Ronald Reagan in 1981.
In the near term, UBS expects reduced formal campaign activity due to increased security measures and revised campaign messaging. Analysts highlight that the Biden campaign has already paused communications, which could lead to more controlled and less accessible campaign events, impacting voter engagement and campaign dynamics.
According to the bank, a key question in the election is how this assassination attempt will influence swing voter attitudes. Analysts explain that historically, such incidents have led to temporary increases in popularity, as seen with Reagan in 1981.
However, UBS has decided to keep their election scenario probabilities unchanged. They currently assign a 45% probability to a "red sweep," 30% to a Democratic victory with a split Congress, 15% to a Trump victory with a split Congress, and 10% to a "blue sweep."
UBS advises investors against making major portfolio changes in response to this incident or any campaign developments.
Analysts recommend managing exposure to individual stocks and sectors that might be at risk in different election outcomes, using defensive structured investment strategies, and considering safe-haven assets like the Swiss franc and gold to navigate potential market volatility and political uncertainty.