Strikingly, although some financial institutions commented on what the race between Democrat Barack Obama and Republican John McCain will mean, several US and European banks declined to do so, with several saying they did not want to talk about current US politics at all. It is a possible sign of how banks, beset with poor publicity over massive losses and now partly reliant on taxpayer’s money, prefer to avoid any controversy.

But among those institutions that did comment, most of them said the US government would step up its regulation and control of financial services. An Obama presidency, especially if the Democrats retain control of Congress, is also likely to signal tax increases, although even a McCain White House would find it hard to avoid increasing taxes to pay for huge public debt.

A key feature of both candidates in the election, in the words of US banking titan Citi, is their economic “populism”: greater restraints on business, banking and trade and support for favoured interest groups such as in health care.

As far back as July this year, Citi, in a research note, said Democrat and Republican contenders were making “populist” noises: “The presumptive candidates are tapping into a secular shift in opinion about the desired level of government involvement in the economy.”

The US bank argues that sectors likely to benefit from more activist government are non-carbon energy sectors – such as nuclear power – and healthcare.

At Denmark-based Saxo Bank, strategist John Hardy said that pressure for governments, including the US government, to act in the face of crisis, is irresistible.

“The point is essentially moot: when markets go into crisis mode, the public sector swings into action because politicians are exhorted to 'do something' and politicians can’t just stand by while their individual and corporate constituents go belly up in droves,” he said.

“Whichever candidate is elected and takes office next January, he will be facing an economic environment more grim and fraught with challenges than any preceding president since Franklin D. Roosevelt took office in 1933,” Mr Hardy said.

He warned that a return to protectionism is a serious risk. Under Mr Hardy’s “best case” scenario, a new US administration “only nods its head at populist pressures related to the low cost of labour abroad despite the high unemployment rate at home, and the only efforts to bring any new legislation are small adjustments to NAFTA, using the excuse of environmental standards to erect limited trade barriers and protect certain manufacturing sector jobs”.

Under the “worst case”, countries will erect high tariff walls and as a result, global gross domestic product could contract by as much as 20 per cent by 2012.

James Abate, who manages the PSigma American Growth Fund, said the candidates’ economic policies do not differ substantially – although Mr McCain will be less inclined than his opponent to hike taxes such as capital gains taxes.

“From a pure academic perspective, research based on the past 80 years shows that the stock markets in the US have performed better under Democrats, while US government bonds performed better under Republicans,” Mr Abate said.

He points out, however, that such generalisations need to be treated carefully since current president George Bush has presided over the largest increases in domestic spending, excluding defence, since the ultra-liberal Democratic president Johnson, while Democratic president Clinton saw the annual government budget reach a surplus.

“With Senator Obama, it’s safe to say that he will raise capital gains taxes to levels nearer to the tax rates on ordinary income.  The public outrage against the titans of private equity and offshore hedge fund managers paying a lower tax rate than a postman will be addressed,” Mr Abate said.

“A McCain presidency is likely to try to keep capital gains tax rates favourable as this is an 'untouchable' to most Republicans.  In terms of the reduction in ordinary income tax rates put in place by President Bush in 2003 that begin to sunset in 2009, it’s very likely that both candidates will allow these to expire given the budget deficits in place now,” he added.

For investors, the difference between the parties is likely to be far less than campaign rhetoric has suggested.

Jonathan Bell, chief investment officer of Stanhope Capital, the UK-based multi-family office, said that taxes are more likely to rise under an Obama presidency.

Mr Bell said: “Whoever wins tax rates will have to rise, but they will probably do so more under Obama than under McCain. The stock market tends to react negatively to higher taxes, but given Obama's lead in the polls I suspect his victory is already priced in. Whoever wins is likely to benefit from a post election rally owing to the low level of the market at present, but this may not last very long.” 

Fredrik Nerbrand, Head of Global Strategy, HSBC Private Bank Group Private Banking, said he expects further financial sector regulation but does not expect policies to clamp down on free capital and trade flows.

“Even though global markets have got themselves into a bind at the moment, free markets tend to be the best system to channel assets to productive investments. Global growth has been underpinned by free trade over the past decade. Reversing or trying to limit this would, in our view, cause inflation and interest rates to rise, compress corporate margins and constrain global economic growth,” Mr Nerbrand said.

“Ultimately, we are likely to see further financial market regulation. In our view, it is critical not to over-regulate financial markets as the impact on long-term growth would be significantly impaired,” he said.

Reporters Wendy Spires and Rachel Walsh contributed to this article.