23 Oct 2020
Stock markets are already pricing-in a Biden win in the U.S. presidential election in 11 days – and, against conventional wisdom, a Democrat victory will be welcomed by investors.
The assessment from Nigel Green, the CEO of one of the world’s largest independent financial advisory and fintech organisations, comes as President Trump and Joe Biden faced off in their final 2020 presidential debate on Thursday night.
The candidates sparred over the coronavirus pandemic, the stock market, the economy, immigration and foreign policy.
Mr Green comments: “The last debate was certainly more civil than the previous encounter, but it didn’t add much more to what we already know about the candidates’ personal and policy differences.
“Therefore, we can expect the markets to continue pricing-in a Biden win, something which has begun in earnest in recent weeks.
“This has been evidenced by investors piling into renewables, industrials and other sectors that could benefit from Joe Biden sweeping into power on a ‘blue wave’ victory.”
He continues: “Conventional wisdom suggests a Democratic win would be negative for markets due to higher taxes, more regulation, and higher spending amongst other things.
“But there’s nothing conventional this time around.”
The deVere CEO notes: “The massive extra stimulus of up to $3trn wanted by Democrats in January would buoy the markets and would have investors think about a broader-based economic recovery – rather than a narrower, tech-heavy one.
“Cyclical stocks are likely to outperform on the back of this fiscal stimulus and the inflationary expectations.
“This scenario would prompt most analysts to upgrade U.S. economic growth forecasts.”
He adds: “In addition, there is likely to be a cooling down of tensions with China on trade and other issues which have been important sources of turbulence on stock markets over the last four years.
“More stability and certainty from the White House will be championed by investors.”
Mr Green concludes: “Wall Street does have a hit-and-miss track record of predicting the election outcomes, but for now markets are betting on Biden – and, unusually, they seem to favour a significant Democrat win.”