(Reuters) – Democrat Joe Biden on Saturday predicted the winner of the US presidential election by major television networks, with many investors welcoming the news to markets but warning of continued volatility.
Republican President Donald Trump, who has made repeated claims of electoral fraud without providing evidence, immediately accused Biden of “hurrying to make a false claim as a winner”.
Investors here have said that they will be focused on the next:
* Senate. All eyes are now on two runaways to be held in Georgia in January, which will determine who controls the upper chamber of Congress. Investors are weighing the impact that a Biden administration will have on its ability to push through stimuli, regulation changes and any tax increases.
* Trump’s response. Although investors are less concerned about the steep rise in US stocks, some expressed concerns about what Trump might do during the lame duck session before the inauguration. He said that the unexpected move could lead to market volatility.
* Stimulus and Fed. Attention will now turn to Biden’s ability to obtain consensus on fiscal stimulus and how much the Federal Reserve can do to support a coronovirus-hit economy. With the likely prospect of a Republican Senate, hopes for an easy major stimulus victory are back. What happens there will also have implications for the Treasury.
* Currencies. A rapid recession picture is unfolding for the US dollar, indicating the worst week since March that Fed money printing could be deployed to speed up the economy rather than government spending.
* Tech stock. High-flying tech stocks benefit from a potential gridlock because it reduces the likelihood of investors selling shares that worry about capital gains tax increases. Nevertheless, these stocks could see some tax-fuel sales ahead of Georgia runoff. Other stocks that benefit from a Biden win: solar, cannabis and infrastructure.
* Biden’s Cabinet. Investors are now waiting for Biden’s cabinet decision on whether he will rule as a business-friendly liberal or promote progressive legislation that could weigh on sectors such as financial and oil, but clean energy.
Compiled by Megan Davis; Editing by Jonathan Otis