The 2020 US presidential election will take place in just over a week on November 3rd. Democratic nominee Joe Biden is heavily favoured to win (at time of writing, poll-aggregator Real Clear Politics has him leading Donald Trump by 51.1% to 42.5% in national polls). Should Biden emerge victorious, expectations are for higher taxes (bad for markets) but also $4 trillion of government stimulus (good for markets). The Wall Street Journal expects a Biden win to boost US GDP by 2% to 3% in the short term on higher stimulus measures. And, although a Democratic victory wouldn’t necessarily ease market volatility, it could offer the political certainty needed to move markets forward.
While US politics remains very much the main focus of markets, news flow on the pandemic remains important to keep an eye on. The most recent data shows daily average cases of COVID-19 rose by more-than +16% week-on-week globally, with new infections in Europe climbing by 97,000 per day (+44% on a weekly basis). This is undoubtedly a worsening situation and explains why many European regions are implementing new lockdown measures. The ‘second wave’ of the virus in the Northern Hemisphere, with winter approaching, is likely to dominate the news cycle once we have a new President in the White House. It also means many more economic stimulus measures could be on the way.
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