A win by Democratic party candidate Joe Biden in the US presidential election will likely be welcomed by markets despite “conventional wisdom” that Democrats are bad for markets.
According to deVere chief executive, Nigel Green, the “win” for Biden in the third and final debate against Donald Trump led to speculation that Biden could win the election.
If the Democrats also won the Senate, this would lead to a “blue wave” in both houses of Congress.
Democrats were traditionally viewed as negative for markets but markets now believe the extra spending would reduce the market’s reliance on technology companies.
“We can expect the markets to continue pricing-in a Biden win, something which has begun in earnest in recent weeks.
“This has been evidenced by investors piling into renewables, industrials and other sectors that could benefit from Joe Biden sweeping into power on a ‘blue wave’ victory.
“Conventional wisdom suggests a Democratic win would be negative for markets due to higher taxes, more regulation, and higher spending amongst other things. But there’s nothing conventional this time around.”
He said he expected cyclical stocks would outperform on the back of the extra fiscal stimulus and inflationary expectations which would likely prompt an upgrade to US economic growth forecasts.
A Democratic victory could also ease tensions with China which had been a cause of volatility on the stockmarket in the past few years thanks to Trump’s trade war.
