INSUBCONTINENT EXCLUSIVE:
Rates Strategist at BMO Capital Markets in New York.
The election comes as the market is also losing the low-rate monetary policy that has
supported equities during its near decade-long bull run, as the Federal Reserve is raising interest rates to stave off inflation.
Without
both fiscal and monetary stimulus, Wall Street performance will depend even more on fundamental factors at a time investors are looking for
I think in order for the bull market to continue what it really needs is strong earnings in the face of what is likely to be increasing
Republicans swept today, you would get more fiscal stimulus but that also would likely result in higher interest rates and the Fed moving
potential for some fiscal stimulus is still alive through an infrastructure spending package, an area where analysts say Trump and Democrats
could find common ground and where an agreement could boost stocks, particularly shares in construction and materials companies.
HEADWINDS
data and prediction markets ahead of the elections, and had been anticipated by investors.
Immediate market moves to the news may be
Two years ago, stocks futures plunged when it became clear that Trump would win the presidency, only for them to reverse course within
For the two calendar years following each national US election, the SP 500 had a mean annual increase of 12% under Republican-controlled
governments, compared to an increase of 9 per cent for Democratic-controlled governments and a 7% rise for gridlocked governments.
Yet
elusive.
Democratic control of the House makes the prospect of a new tax-cut package, following the recent steep cut in the US corporate tax
Trump has been seeking a 10% middle-class tax cut while making permanent individual tax cuts from his 2017 tax overhaul.
The change in House
climate that investors say has helped stocks
A Democratic-led House could bring greater oversight on industries such as pharmaceuticals and banks.
With fresh oversight power, Democrats
In the event the House attempts to impeach Trump, history suggests market volatility could spike, at least in the short term, according to
OppenheimerFunds.
But, on the positive side for stocks, analysts doubt Democrats would be able to roll back the heart of the market-friendly
a steep pullback in October from record highs, which some investors in part attribute to jitters over uncertainty about the election.
