US presidential election: strategists predict the outcome of the US election – and its effects on the stock market | message
indices in this article
The majority of respondents assume Biden will win
Biden’s tax policy could hurt the US economy
Election result could affect trade dispute with China
Joe Biden is a favorite among strategists surveyed
In a poll conducted by CNBC by email in mid-August, fourteen out of twenty strategists who remained anonymous said they firmly expected Joe Biden to win the US presidential election in November this year. Half of all surveyed analysts also said that the S&P 500 index is likely to collapse in the first month after the election. Eight of them expect a slump of five percent, with this group both believing that Biden will win and that Trump will win the race or that the election result will be challenged. Two of the strategists even assume that the S&P 500 will fall by up to ten percent. Here the two voices split between Biden and Trump. In total, however, five participants are certain that the election will be followed by an economic recovery phase, four respondents assume a narrow trade margin. Only one of the strategists didn’t answer the question at all. More than half of all respondents see the S&P 500 at the end of the year but above the current level.
Except for one strategist who comes from the Asia-Pacific region, all participants are based in the United States.
Tax policy of the Democrats viewed critically by market participants
One reason for the negative economic impact that Biden’s victory could have is the tax policies of the Democratic Party’s presidential candidate, according to respondents. For example, one strategist suspects that the market is less likely to recover if Biden wins the election and the Democrats win the Senate. Should he emerge victorious, but the Senate still remains in Republican hands, Biden could have trouble getting his tax agenda through. Overall, however, only three of the survey participants expect an undisputed victory for Trump. One of the analysts thinks Florida’s election results will be decisive for who will spend the next term in office in the White House. Trump will probably win most of the conservative states for himself, but if Biden wins in Florida, which the respondent assumes, he will be able to win the race nationwide.
Even if Biden’s tax policy may meet with criticism from some market participants, his approaches to combating the health and climate crisis are more likely to be accepted by the population, which means that doubters could be mildly overall.
This is how the markets might react if Biden doesn’t win
When asked how the market would react to a Trump victory, eleven of the participants said the S&P 500 could rebound by up to five percent. Five respondents rather expect a narrow trading range in which the index will be. Some analysts suggested that while capital markets benefited from Trump’s first term, his trade and immigration restrictions could hurt economic performance through 2021. Furthermore, the markets are currently already under pressure from high valuations.
In the event of a contested election, eleven participants expect the index to drop by five to ten percent, and five even believe that a drop of more than ten percent is possible. It wouldn’t be the first time for one US election What is contested: Already in the presidential election in 2000, in which George W. Bush and Al Gore competed against each other, the votes from Florida were counted again after election day. The intervention of the Supreme Court settled the discussion in Bush’s favor, but not until more than a month after the original election date.
Tensions between the US and China
According to the surveyed analysts, the election result could also have an impact on the US trade dispute with China. While Trump could further tighten his hostile stance towards China, which would have a negative impact on the tech sector rather than trade as a whole, Biden could be more moderate. While the Democrat is focused on bringing manufacturing jobs back to the US, he will likely pursue a less confrontational strategy. As a result, negotiations would be conducted in a more traditional diplomatic style that has been lacking under Trump’s presidency.
Finanzen.net editorial team
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