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Economic and Financial Market Update: What Will They Say In The USA?

23 October 2020

Summary:

All US Presidential elections get prominent attention. This one even more so;
Joe Biden is increasingly favoured to win;
The makeup of Congress will be almost as important in terms of getting things done;
Regardless of who wins, the US will be a different place in four years.

The US election will be held on Tuesday 3rd November. The ‘battleground’ states in this election are Arizona, Florida, Georgia, Iowa, Michigan, North Carolina, Ohio, Pennsylvania and Wisconsin. Most of the headlines will be about who is the next US President. But there are also elections for all of the House of Representatives and one-third of the Senate (as well as a range of state elections).

Currently there are a number of ‘hot button’ issues where the shape of US policy could be influenced by the result of the election. A Trump win would see an aggressive country-by-country approach to trade deals continue. A Biden victory would more likely see a return to the US agreeing to global rules. An aggressive stance in relations with China will most likely remain regardless of who wins. The US approach to other international issues such as climate change and taxes on multi-nationals also could change. Financial markets most immediate focus is on what the election means for fiscal policy.

Currently Joe Biden is comfortably leading all the polls. It is true that Hillary Clinton led the polls going into voting day in 2016. But Joe Biden also leads the polls in the ‘battleground states’ as well as in the betting markets. A large victory by the Democrats would most probably lead to a smooth Government handover. But in the event of a narrow Biden victory there may well be Court appeals (as there was in 2000). It is widely expected that the Democrats will win the House of Representatives, and are favoured to win the Senate.