What is the Biden Presidency mantra for stocks, bonds and commodities


After days on the tenthook, investors now have clarity about the next occupation of the White House and will launch plans for Joe Biden’s presidency.

On Saturday, the winner was projected by the Biden Associated Press. The 77-year-old Democrat defeated Trump in Pennsylvania and other major states, pushing him to victory against President Donald Trump.

The victory forecast for the former vice-president came amidst the heavy toll of the COVID-19 pandemic, which implicated much of the race.

The changing political landscape here means for Wall Street investors.

Stocks

Despite the victory in the 2020 elections, analysts called it a declared winner and thus low election uncertainty paved the way for the US president, even President Trump’s campaign, as recently as Saturday On the morning of, many battlegrounds stating their intention to challenge the election results.

In addition, many investors viewed a Biden presidency, but a Republican Senate, as the most likely outcome before the November election, and thus there was plenty of time to work out the implications for the final time.

“This is a known result. In an interview before APO CNN, NBC and Fox News, BMO Global Asset Management’s portfolio manager, Scott Kimball, said risk assets preferred certainty.

“A divided Congress, from a policy standpoint, takes extremes from both directions,” said the BMO money manager, taking more ambitious measures of Republican or Democrat policy out of the equation.

S&P 500 Index SPX,
-0.02%
Last week’s trade saw only this.3% trade, while the tech-heavy Nasdaq Composite Comp. Gained 4%.
+ 0.03%.

Now the big story may be how earnings grow faster than stocks of more financially sensitive companies.

Biden may have trouble with strong regulatory and lethal actions against some high-technology companies, such as Google parent Alpana GOOG,
-0.09%

GOOGL,
-0.15%,
Who now faces an anti-lawsuit and Facebook FB,
-0.43%
Which is threatened by Congress under section 230 of the Communications Decrees Act, jeopardizing the platform’s safety from liability as a publisher or content provider.

As investors meet their expectations for the size of another financial aid package by Congress to boost economic recovery from the coronovirus epidemic, an increase in US Treasury yields may increase the value of future earnings of shares, Estee Dweck, head of global macro strategy for investment managers Natixis, told MarketWatch.

Bond

A less ambitious fiscal policy is expected, with Biden likely to run in opposition to Senate Republicans. In that scenario, the rally of bonds will continue as the debulders are less afraid of high inflation expectations which will be exacerbated by rapid economic recovery and debt issuance.

The stock market may be overjoyed at the prospects for a divided government after the US election, but it remains an open question as to how the Federal Reserve can make an economic recovery out of the epidemic after the already vast expansion of its balance sheet earlier this year . .

TMUBMUSD10Y, yielding 10-year Treasury notes
0.815%
Tuesday night saw a 0.94% lead to 0.78%, when hopes for a Democratic sweep of Congress and another massive fiscal stimulus for the White House were at its peak. Treasury yields are therefore likely to remain low or Biden’s entry into the White House.

Jim Silinsky, global head of fixed-income at Janus Henderson, said the biggest risk of market participants being ignored is the possibility of economic stagnation.

“I know that everyone is worried about inflation. I am not, ”Selinski said on Thursday during a webinar organized by Janus about the impact on the markets of elections.

Rather, he is more concerned that the Federal Reserve’s commitment to keep benchmark interest rates near 0% for the coming years to increase private debt and economic growth or prevent “stagnation spreading to large parts of the economy” Will not be enough.

goods

CL.1 for crude oil prices,
+ 0.94%,
A win by Biden could lead to more restrictions in the energy market, including the shell market. Biden has said that he plans to ban new oil and natural-gas drilling permits on federal lands.

Analysts said production restrictions could increase oil supplies and oil prices. Nevertheless, Biden has hinted that he could ease the Iran nuclear deal and sanctions, allowing more oil from the Islamic Republic to market.

See: US election brings win-loss scenario in oil and energy sector

Meanwhile, Biden’s victory, coupled with a potentially divided government, is likely to create uncertainty around the size of future fiscal stimulus measures, a boon of safe-assets like gold.

Emerging market

Similarities in developing markets, and particularly in Asia, could succeed if Biden’s presidency leads to a more stable foreign and international trade policy.

Dwek said geopolitical uncertainty will attract more investors to Asian assets, and has already seen strong gains on the back of the region’s strong public health response to the COVID-19 epidemic.

IShares MSCI Emerging Markets ETF EEM,
+ 0.46%
It closed up 7.2% for the week, while dropping it to 6.82% so far in 2020, as Friday closed.

Reporting contributed by Myra Pickach and Joey Wiltmath

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