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This is what a Biden presidency uses for stocks, bonds, and commodities



After days of waiting, investors are now clear about the next White House and will begin to plan for Joe Biden’s presidency.

On Saturday, Biden was predicted by the AP as the winner. The 77-year-old Democrat defeated Trump in Pennsylvania and other key states, helping him win against incumbent President Donald Trump.

Victory predictions for the former vice president come amid the heavy losses of the COVID-19 pandemic that framed much of the race.

This is what the changing political landscape means for investors across Wall Street.

Inventory

Regardless of the 2020 election victory, analysts say a declared winner and therefore less volatility in the election paves the way for even higher U.S. stock prices, even with President Trump̵

7;s campaign, recently on Saturday morning, spells out its intention to challenge election results in some battlefield states.

Also, many investors have put pen to paper on a Biden president but a Republican Senate is the most likely outcome before the November election, and therefore plenty of time to explore the last effect.

“This is a known outcome. Risk assets like certainty, ”said Scott Kimball, portfolio manager at BMO Global Asset Management, in an interview before AP CNN, NBC and Fox News called for a presidential race in favor of Biden. on Saturday morning.

“A divided Congress, from a policy perspective, takes extremes out of either direction,” added the BMO money manager, bringing more ambitious measures from the Communist Party’s agendas. Draw or Democracy out of the equation.

S&P 500 SPX Index,
-0.02%
completed last week’s trading 7.3% just this week, bolstered by a 9% gain on the Nasdaq Composite COMP,
+ 0.03%.

The big story now could be how fast-growing stocks work against the stocks of economically more sensitive companies.

Biden may find it difficult to foster stronger antitrust and regulatory action against some of the top tech companies, such as Google’s parent Alphabet GOOG,
-0.09%

GOOGL,
-0.15%,
currently facing antitrust lawsuits and Facebook FB,
-0.43%
is threatened by Congress calling section 230 of the Information Framework Act in question, jeopardizing the defense of the platform from liability as a publisher or content provider .

As investors place expectations on the size of another congressional financial aid package to spur an economic recovery from the coronavirus epidemic, U.S. Treasury yields could fall, increasing the value of earnings. The future of bull stocks, Esty Dwek, head of global macro strategy for Natixis investment managers, told MarketWatch.

Bonds

With Biden likely to face opposition from Senate Republicans, less ambitious fiscal policy was expected. In that scenario, the bond will continue to rise as debt sellers have less fear of higher inflation expectations after the economy recovers faster and increases debt issuance.

Stock markets may rejoice at the prospect of a divided government following the U.S. election, but it is an open question as to what else the Federal Reserve can do to spur a recovery. Economic pandemic after the capital balance sheet has expanded greatly earlier this year.

10-year Treasury Bond yield TMUBMUSD10Y,
0.815%
are at 0.78%, after trading at a 0.94% high on Tuesday night as hopes peaked for a Democratic sweep of Congress and the White House and a measure Other major financial stimulus. So Treasury yields are likely to stay low or fall even further when Biden enters the White House.

Jim Cielinski, global head of fixed income at Janus Henderson, says one of the biggest risks market participants may ignore is the economic stagnation.

“I know everyone worries about inflation. I don’t, ”Cielinski said Thursday during a webinar hosted by Janus about the impact of the election on the market.

Instead, he is more concerned that the Federal Reserve’s commitment to keeping the benchmark interest rate at 0% for many years to come will not be enough to boost private credit and economic growth and halt. “Inertia spread to large parts of the economy”.

Goods

As for the price of crude oil CL.1,
+ 0.94%,
Biden’s victory could lead to more restrictions in the energy market, including shale production. Biden said he plans to ban new oil and natural gas drilling licenses on federal lands.

Production restrictions could lead to tighter supplies and higher oil prices, analysts said. However, Biden has also shown that he can reinstate the Iran nuclear deal and loosen sanctions that could lead to more oil on world markets from the Islamic Republic.

See: The US election offers a win-lose scenario for the oil and energy sectors

Meanwhile, Biden’s triumph, combined with a divided government, is likely to create uncertainty as to the size of future fiscal stimulus measures, a boon for assets. Safe shelter like gold.

Emerging Markets

Fairness in developing markets, and especially in Asia, can thrive if Biden’s presidency leads to a more stable foreign trade and trade policy.

Falling geopolitical volatility will attract more investors to Asian assets, Dwek said, and these assets have achieved strong returns thanks to the region’s strong public health response. for the COVID-19 pandemic.

Emerging markets iShares MSCI ETF EEM,
+ 0.46%
closing up 7.2% for the week, up 6.82% so far in 2020, as of the end of Friday.

With report contributed by Myra Picache and Joy Wiltermuth


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