With Biden declared winner, what’s next for investors

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FILE PHOTO: Stock trader monitors stock prices on the stock exchange as the spread of coronavirus disease (COVID-19) continues in Frankfurt, Germany, October 27, 2020, REUTERS / Kai Pfaffenbach

APAC

Reuters staff



(Reuters) – With Democrat Joe Biden being the predicted winner of the U.S. presidential election by major television networks on Saturday, many investors hailed the news as good for the markets, but warned of continued volatility.

Republican President Donald Trump, who has made repeated claims of electoral fraud without providing evidence, immediately accused Biden of “rushing to impersonate the mistaken winner.”

Here’s what investors have said they will focus on next:

* The Senate. All eyes are now on two laps expected in Georgia in January, which will determine who controls the upper house of Congress. Investors are weighing the impact this will have on a Biden administration’s ability to impose stimulus, regulatory changes and any tax increases.

* Trump’s reaction. While investors are increasingly worried about the huge swings in U.S. stocks, some have worried about what Trump might do during the lame duck session before the inauguration. Unpredictable moves could cause market volatility, they said.

* Stimulus and the Fed. Attention will now turn to Biden’s ability to secure a fiscal stimulus deal, and anything the Federal Reserve can do to support the economy hit by the coronavirus. With the potential prospect of a Republican Senate, hopes of a big, easy stimulus win have been lowered. What happens there will also have implications for Treasuries.

* Currencies. An increasingly bearish picture is unfolding for the US dollar, which suffered its worst week since March amid signs that the Fed’s money printing rather than government spending could be deployed to support the economy.

* Technological actions. High-tech stocks should benefit from a potential deadlock, as it reduces the chances of investors selling those stocks amid concerns about capital gains tax hikes. Still, those actions could see tax-fueled sales before Georgia runoff. Other stocks that benefit from a Biden victory: solar, cannabis and infrastructure.

* Biden’s cabinet. Investors are now looking to the choices of Biden’s Cabinet to assess whether he will rule as a pro-business moderate or whether he will push forward progressive legislation that could weigh on sectors such as finance and oil, but strengthen the ‘clean energy.

© 2020 Reuters. All rights reserved.

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