WHAT WOULD A BIDEN WIN MEAN FOR EQUITY MARKETS?

(02.11.2020) Recent weeks have seen Democratic candidate Joe Biden increase his lead in the opinion polls. What might a Joe Biden presidency look like and what would it mean for the equity markets?

Democratic candidate Joe Biden has increased his lead in the national opinion polls to around 10 percentage points. He also leads in the ‘swing’ States by approximately 5 percentage points which is very important as the presidential election is an electoral college (where each State is worth a certain number of votes). In 2016 Hillary Clinton won the popular vote but lost the electoral college.

Biden has a number of key pledges. He wants to raise the minimum wage and reverse the Trump tax cuts for the rich. He would also like to invest heavily in renewable energy projects and wants to expand the Obama healthcare programme.

As Joe Biden’s lead has steadily increased markets have begun to focus on the ‘Blue Wave’ which describes a scenario where the Democrats not only win the Presidency but also gain control of the House of Representatives and the Senate. In this scenario it is expected that a USD 3 trillion stimulus package could be passed. This is currently partially priced in. So, a Biden win, combined with Democratic control of Congress, would allow US and global equity markets to move higher. A Biden win without control of Congress would probably see a correction in US and global equity markets. A Trump win, without control of Congress, would also likely see equity markets sell off.

Categorised in: Uncategorised

This post was written by Robin