Bloomberg/Detroit News: With Joe Biden’s lead widening in the polls and President Donald Trump’s campaign sidelined by the virus, investment strategists now say there’s less of a chance for a contested election.
One thing that's clear is that investors are starting to get very comfortable with the idea of a Biden victory, and increasingly don't see it as a negative for stocks https://t.co/6dfuojmlL9
— Joe Weisenthal (@TheStalwart) October 5, 2020
A clear-cut Democrat victory could avoid a long and messy legal battle and provide certainty to markets that have been nervous about election risks, according to strategists from Citigroup Inc. to JPMorgan Chase & Co.
The S&P 500 was up about 1% as of 9:32 a.m. in New York, havens including bonds are seeing little demand and the greenback is down.
“Polls are shifting from a close election and prolonged uncertainty to more a dominant Biden and clean succession,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA. “That is reducing uncertainty and increasing risk appetite.”
Cross-asset traders are taking the newsflow in their stride, despite confusion over the president’s condition and more positive tests from Republican leaders.
A poll released Sunday – taken between Tuesday’s debate and Friday’s news of the president’s infection – found that Biden’s national lead had leaped to 14 points, from 8 before the debate. Biden also has set two records for monthly fundraising in August and September, giving him enough money to dominate Trump on the airwaves.
WHY A BIDEN VICTORY COULD BE A HUGE WIN FOR BANK STOCKS AND OIL STOCKS
— Joe Weisenthal (@TheStalwart) September 28, 2020
“Markets seem have lowered the chance of prolonged uncertainty post-November 3,” Barclays Plc strategists Ajay Rajadhyaksha and Shawn Golhar wrote in a note Sunday. “Given that Vice President Biden has been ahead in most polls, this suggests that markets are assigning a bit more probability to his win and a bit less to a close and contested outcome.”
Biden because of the credits he'll bring as incentive to buy green cars, similar to Canada's ~$3-5K tax writeoff/discount when buying hybrid/full electric.
Trump wouldn't offer that because of the conflict of interest with "dirty energy" stocks/investments like coal, oil, etc.
— stoladev (@stoladev) October 4, 2020
Barclays strategists point to a currency pair like the Aussie dollar versus the yen, a proxy for risk appetite. Its one-month implied volatility dropped to the lowest in weeks after the presidential debate. It has since rebounded, but remains below its 200-day average.
The markets are rising a bit lately b/c they're beginning to price in an uncontested election b/c of a Joe Biden route of Trump. Happy Days will be here again!https://t.co/PwT9eThlmV
— Make Deadbeat-Don Gone (@JohnLukeSam1) October 5, 2020