The markets are ready for momentum after the election, but the surprise stocking surprise victory is causing stocks to derail in May.

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The financial markets were on a rollercoaster ride last year, and having survived the shock of the pandemic, they are now optimistic in the hope of an economic stimulus package.

The question for traders now is not if, but when it will pass. And how much does the next government hope to bet on it if no agreement is reached in the next two weeks or if it doesn’t pass the Senate.

Many expect Joe Biden to win and trust the latest poll data that the Democrats’ hopes are far ahead of the incumbent President Donald Trump.

“The background to this whole fiasco is that everyone knows that some stimulus will eventually be passed,” Edward Moya, senior market analyst at Oanda, told Tekk.tv. “The size and timing are still unknown.

“They see a certain optimism in the market because these talks are underway,” Moya said.

“The markets are calculating that it will be a Biden presidency and the Democrats have a very good chance of getting into the Senate, so we will probably have an economic stimulus package in January that is much bigger than what we are currently discussing if there is no pre-election agreement.

Moya said that stocks are still being boosted by the fact that the Federal Reserve will probably continue to aggressively protect the U.S. economy.

“They cannot cover a lack of fiscal support, but they will do everything in their power to keep the economy strong,” he said.

Moya believes the case for stocks remains strong, the choice will only determine how much more stimulus we see.

“For the Democrats, it will be much more, and that’s why I think we’ll still see stocks near these record highs.

Other analysts agree with this view.

“We’ve been talking about this for most of the last three months, but it hasn’t happened yet, and although I think there is skepticism that it will be agreed before the election – Mitch McConnell is unhappy that the White House seems to be giving in to Democratic demands – we know that a stimulus will eventually come,” said James Knightley, market analyst at ING, in an email to Tekk.tv. “This could explain why Treasury yields are rising while stocks are currently experiencing problems.

Knightley notes that the election is not the only thing the markets will look at in terms of stimulus. The payrolls are also due on Friday, November 6.

“The recent increase in initial applications and the flattening of homebase employment data, coupled with distance learning that limits the usual seasonal increase in employment, means that we could get a soft payroll – the momentum is already slowing,” he said. “A soft number of jobs would probably be a greater catalyst for politicians to focus their thoughts and take action”.

Gayle Allard, Professor of Economics at IE Business School, also believes that if an economic stimulus package is not passed in the next two weeks, the reaction of the stock market and the movement of the dollar would be dampened.

“Markets have learned to love the idea of a Biden victory,” Allard told Tekk.tv. “They would react well if Biden wins, and I think if there is a surprise trump victory or if it is blocked due to challenges, they will take it very badly,” Allard said.

Market sentiment supports the results of a new survey showing that more than 70 percent of Americans, including more than half of the Republicans, support a new $2 trillion stimulus package.

In the latest New York Times/Siena College poll, 72 percent of voters supported a $2 trillion stimulus package to extend unemployment benefits, send out stimulus checks and provide financial support to state and local governments. Only 21 percent were against it.

Trump has long been fascinated by the stock market and recently campaigned for a bull run as proof of his success as president. The fact that a Trump victory could derail the stock market could be an ironic twist in this election story.

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