
Does it matter who wins the US election?
Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi Asset Strategist
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.
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Important Information
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Data as at 25.09.2020, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.