US elections: current results, expectations and implications

4 nov. 2020

The main event of yesterday for the US and financial markets in general were the US elections: a new President of the United States, 35 Senators, and 435 Congressmen.

The favorites in the race were the Democrats, who were expected to take control of not only the White House, but the entire Congress. Currently Biden leads, but results are not as impressive as they should be.

What does this mean for certain assets and markets in general? The Russian ruble may suffer even more, as new sanctions from the United States are likely and a general deterioration in the already rather strained relations.

By contrast, cannabis stocks could skyrocket on expectations of U.S. legalization. So companies like Canopy Growth or Aurora Cannabis could see double digit growth in the foreseeable future.

As for the US stock market as a whole, the situation is twofold. On the one hand, Biden promised to raise corporate tax, which will hit the financial results of US companies and is a problem for the US stock market. On the other hand, the question of stimulus will re-emerge. The Democrats advocated their most extreme forms. So the injection of a positive is not excluded, but a lot will depend on what position the Democrats will take when they will be responsible for a huge hole in the budget.

The Reserve Bank of Australia yesterday, as expected, cut the rate from 0.25% to 0.1%. It is possible that this will be the first step in a series of monetary policy easing by other central banks. We remind that on Thursday the Bank of England and the Fed will announce their decisions.

From the point of macroeconomic statistics Wednesday will be interesting first of all by the ADP data. Markit PMI indices from the Eurozone and the USA will be objects of interest as well.