Does it matter who wins the US election?

With little more than five weeks until the US elections, I remain convinced that Joe Biden will win. It also looks as though Democrats will keep the House but the race for the Senate is too close to call.

That prospect frightens many investors in US stocks. However, history suggests Democrat presidents have overseen better stock gains than Republican counterparts (on average).

Further, fiscal realities may limit the room for manoeuvre of the next president, thus reducing the gap between realistic policy options (see chart below).

Sectors that I would expect to suffer from Biden's proposed rise in corporate taxation and/or minimum wage include retail, hospitality and food producers (consumer businesses catering to low budget clients may gain). Whether these policies would be enacted in the middle of the Covid crisis is to be seen.

If spending plans do go ahead, I would expect aerospace & defence, construction and healthcare providers to be among the beneficiaries.

Finally, gold could be a casualty of a change in president but I would expect it to receive a short-term boost were the outcome of the election to be contested. 

For our more in-depth assessment click here.

Register here to watch Invesco's webinar US elections: the current state of play.

Register here to watch Invesco's webinar US elections: does it matter who wins?