The odds of a Trump-Biden rematch are becoming increasingly likely for the 2024 US presidential election. Global markets are prepping for whoever could come out on top.

Peter Oppenheimer, Goldman Sachs Global Equity Strategist and Head of Macro Research in Europe, joins Yahoo Finance to discuss the distinct differences between a Trump or Biden presidency and how the global markets would fare.

Oppenheimer predicts “we are likely to see more volatility in the equity market" as the year goes on. Shifts in trade policies could be the biggest blows to global markets, Oppenheimer explains, who predicts Trump’s policy of blanket tariffs could “have a much bigger negative impact outside of the US.”

Oppenheimer does not expect more tax cuts regardless of who wins, citing less “fiscal room" due to the US budget deficit: “It’s unlikely you’ll get fiscal contraction under either outcome.”

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

- The 2024 presidential election, it is a key focus for investors with a Trump versus Biden rematch seeming more and more likely. But what does either outcome signal for the global markets? We want to bring in Peter Oppenheimer, he's Goldman Sachs' Global Equity Strategist and Head of Macro Research in Europe. And we're also joined by Yahoo Finance's Executive Editor Brian Sozzi.

Great to have both of you. Let's talk about what exactly this election could potentially mean here for the markets, Peter. And I think more broadly speaking, is Trump or Biden is one candidate viewed as a better alternative here for stocks?

PETER OPPENHEIMER: Well, I think the first thing-- and thank you for having me, is to say that of course, we have a lot of elections this year around the globe, the most important one being the US. And one thing that's interesting despite the potential volatility that could bring is that implied volatility in the equity market is really very low at the moment to the point that you mentioned in your earlier remarks.

So I do think that we are likely to see more volatility in equity markets as we move through the year. And the elections, and particularly in the US, become more relevant. And obviously, the US election will have a big impact on the global economy. In particular, because of its impact on possible trade policy-- potential Trump administration bringing blanket tariffs across the board of products bought into the US. We'd have a much bigger negative impact outside of the US of course, than in the US itself. And I think that will be the major focus of investors in other markets this year.

BRIAN SOZZI: Peter, Brian here. We've been talking to a lot of folks that are cautioning against another potential Trump presidency maybe not being as good for as investors as the First Presidency was. Of course, you had those tax cuts under President Trump. Do you think a second presidency would be more challenging for investors just given some of the things you outlined?

PETER OPPENHEIMER: Well, I think, Brian, you raise a very good point. I mean, one of the reasons why the equity market, as you recall, rallied so much after that last election was the expansion of tax cuts. And there was more fiscal room to do that then than is the case now given that the budget deficit is so much bigger and US government debt is much higher.

So there's less room really to repeat the scale of the Tax cuts that boosted the stock market so much last time. That being said, it's unlikely that you will get fiscal contraction under either outcome and maybe more focus on regionalization and building up manufacturing again in the US, which might be supportive for US companies, but again, less so for companies trying to sell into the US market.

- Peter, what would you say is the current status of international trade where the US needs in those next four years of any term to position itself? And of the two candidates, where do you see actual movement forward?

PETER OPPENHEIMER: Well, I think this is-- I don't think there's very big difference on this regard with either candidates. I think the general pattern here is one where the globalized process of world trade that was really the dominant driver in the last 15 or 20 years is beginning to reverse to some degree. And this is reflecting the rise in geopolitical tensions, also the realization after the pandemic that complex globalized supply chains may be less reliable moving forwards.

And in addition to that, things like decarbonization is forcing more focus on regional or domestic production. So I think under either circumstances, it's likely that we're moving into an environment where there's less expansion of world trade. And therefore, it really matters a lot what the domestic growth rates are in these different parts of the world.