Investing.com – Investors should buy protection now as August volatility is likely to return amid a tense U.S. election battle, according to a report published Tuesday by BCA Research.

“Investors should buy protection against further volatility. The turmoil in early August was a foretaste of what is to come,” the report found.

The report warns that investors are ignoring the immediate risks to global stability posed by the US election, which represents a “pivotal moment in American and global history”.

Polling data suggests Vice President Harris and former President Donald Trump are in a neck-and-neck race for the White House. BCA chief geopolitical strategist Matt Gertken argues that “unpredictable events” could affect the outcome.

These events could include potential election interference by Russia, which could attempt to influence the race through tactics such as an oil embargo or sabotage. The report suggests that Russia may view a change3 in U.S. leadership as crucial to achieving its strategic goals in Ukraine.

The Middle East is seen as another potential deciding factor in the election race, given expectations of further escalation in the region, BCA said.

Despite these risks, Gertken estimates the chance of a Trump victory at 55% and believes Harris must show that she can withstand the expected increase in global instability.

As the election approaches, these unpredictable events could lead to “negative surprises for markets,” BCA said, increasing the need for investors to seek protection.

To protect against volatility, BCA recommends increasing exposure to defensive and quality stocks and reducing exposure to cyclical sectors. The firm also recommends buying the US dollar and Japanese yen versus the euro, expecting a flight to safety as uncertainty increases.