Market strategists predict the outcome of the US elections
Stock market analysts expect Joe Biden to win.
Most stock market strategists polled by CNBC expect the Democratic nominee Joe Biden will win the presidential race in the United States, but their opinions on what the election results will bring to the stock market differed significantly.
Fourteen out of 20 strategists polled by CNBC are betting on Biden to beat Donald Trump. Half of them expects S&The P 500 will fall in the first month after election day – although not everyone who predicts a fall in the stock market chose Biden. Five experts expect the stock market to rise, four predict movement within a limited range, and one declined to answer.
Eight said they expect a decline in the S index&P 500 up 5% in the first month after the election: Three of this group chose Biden, two – Trump, and two predict a controversial election. Two strategists admit a decrease in the S index&P 500 by 10% after the election – one of them chose Biden, the other – Trump.
CNBC offered analysts anonymity in exchange for their views; 19 out of 20 respondents lived in the United States, one in the Asia-Pacific region. Email survey completed last week.
Here’s how markets may predict who will win the presidential election
Some attribute the market backlash to Biden’s proposed tax policy.
«If Biden wins and Democrats enter the Senate, the first major move in 2021 will be a decline as the tax agenda takes shape», – says one of the analysts.
Another said the market reaction will depend on how the Senate race picks up steam: «If the Democrats win the Senate, and Biden wins and sits in the White House, then the market rally will probably be harder to start than if Biden wins, but the Senate will remain Republican, as he is unlikely to be able to run his tax program out of control under this scenario.».
Only three out of 20 survey participants expect Trump’s clear, uncontested victory.
One of the respondents said that the future of the incumbent will be decisive in the state of Florida. «Trump will take over most of the red states, however I believe he will lose Florida and this will lead Biden to victory», – said CNBC expert.
While some market participants are under pressure over Biden’s tax policy, others said they feel a comprehensive response to the health crisis, and proposed investments in clean energy and infrastructure could offset negative investor sentiment..
Trump’s Victory – or Contested Election
When asked what the market’s reaction to Trump’s victory would be, 11 respondents said that S&The P 500 could rise by 5%. Another five said the market will remain in a limited range. Some have argued that while President Trump was good for capital markets during his first term, the markets’ growth potential is limited until 2021 as his trade and immigration policy restrictions could hurt economic production..
High grades remain a big risk for markets, strategists say, as vaccine news is the only support for markets at record highs.
Respondents expressed concern about the possibility of a contested election. When asked about the implications of such a conflict for the markets, 11 analysts predicted a 5-10% decline, while five others said the sell-off could be worse than 10% on the S index.&P.
2000 presidential campaign George W. Bush and democrat Albert Gore faced a recount in Florida. The Supreme Court stepped in, and the dispute in Bush’s favor was finally settled in early December – more than a month after Election Day..
Selection ranges for S&P 500
CNBC interviewed 20 market analysts about what they think 2020 will end for S&P 500. The index closed last Friday at a record level of 3397.16.
Eight analysts have named the 3400-3600 range as their target for the index for December 2020. The five are forecasting a range of 3000-3200, which means a decline of about 6-12% from current levels. Estimates and uncertainties about the coronavirus pandemic were also the reasons for this negative outlook..
Three strategists have chosen the growth of the S index&P 500 is above 3600. Two think it will go below 3000.
Analysts believe anti-Chinese sentiment in the United States has bipartisan support, and they said the two candidates would have different attitudes toward the issue..
President Trump is likely to strengthen his anti-China stance, they said. However, the attendant challenges will be felt more strongly within the tech sector than on the broader trade front..
The Biden presidency is expected to take a moderate approach to relations with China, several respondents said. Some predicted that Biden would continue to try to repatriate manufacturing jobs to the United States, but that this approach would be less confrontational..
As one of the analysts who participated in the survey said, «negotiations will return to the traditional style of diplomacy».
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