President-elect Joe Biden will deliver a boost to global stock markets and the U.S. and world economy, according to Nigel Green, chief executive and founder of deVere Group.
The Democrat candidate defeated Donald Trump and is set to become the next U.S. president, having won more than 73 million votes, the most ever for a U.S. presidential candidate. Pending the outcome of any legal challenges, Biden will be sworn in on 20 January 2021 as the 46th president.
Mr Green says: “President-elect Joe Biden will deliver a boost to global stock markets and the U.S. and world economy.
“Although a Biden win was pretty much priced-in by the markets, his victory will eliminate uncertainty – which they loathe – and they will rally further as a result.
“Even possible legal challenges from Trump will be dismissed by investors who will instead be focusing on the renewed certainty and stability that a Biden White House will bring, including in key areas such as trade tensions with China, keeping the U.S. in the World Health Organization, resigning the Paris climate agreement, and abiding by other international agreements and long-standing international allies.”
He continues: “Biden will need to work with the Republican-led Senate to secure fiscal stimulus to bolster the economy. He might struggle to get the $3trn wanted by Democrats, but some package is likely.
“This will buoy the markets and would have investors think about a broader-based economic recovery – rather than a narrower, tech-heavy one.
“As the world’s largest economy, sustainable, long-term growth in the U.S. will have a positive ripple effect for the world economy.”
The reduced chance of massive fiscal stimulus will also mount pressure on the Federal Reserve “to inject further liquidity,” he notes
In addition, the Biden win without full Senate support means less risk of regulation and higher corporate and personal taxes, which will give more oxygen to the markets and economy, Green adds.
Didier Saint-Georges, managing director and member of the Strategic Investment Committee at Carmignac, also flagged as crucial the majority at the Senate with which the next President will have to govern.
“There still is a narrow path for this majority to be democratic, if one of the two Georgia run-offs on January 5 is won by a democrat, and VP Kamala Harris’ vote is added, as President of the Senate.
“But even in this case, the fairly conservative bias of some democratic senators suggests that the most radical economic agenda on the democratic platform might be difficult to push through.
“In the field of international relations, Joe Biden will have much freer hands, such as re-joining the Paris accord on climate change or the World Health organisation. But the fundings associated with such decisions will still require Senate support.
“A firm stance towards China might be where bipartisan support might be easiest to reach.”
DeVere’s Green added that sectors to benefit from the Biden administration’s agenda would include renewable energy, industrials and infrastructure, and small caps.”
Commenting on the markets following the weekend’s news, Stuart Clark, portfolio manager at Quilter Investors, said:“For now, markets seem to be embracing the news and have not been too unsettled by the lack of clarity last week brought. For long-term investors it goes to show that this election is a timely reminder to block out the noise and not be swayed by certain political events.”
De Vere’s Green added a warning: “Biden will need not only to work with the Senate but to heal a divided country.
“The world is looking at America, it needs to lead the world economy in a positive, forward-thinking and smartly way – and at pace.
“If it doesn’t, we can expect American economic dominance to ultimately be replaced by an emerging and fast-growing Asia.”
