Image source: express.co.uk

As we all know by now that the US election is just about 5 weeks away and the heat is on as 3rd Nov draws closer.  As we all witnessed the president’s debate yesterday which turned out to be a  more of a bickering session where both people hurled insults and repeatedly interrupted each other. One would probably get very little out of yesterday’s debate other than some entertainment value.

At a point in time Mr Biden even called Mr Trump a “clown” and told him to “shut up” and Mr Trump questioned Biden’s intelligence. What a debate!

Issues like handling covid19, racism were hardly rationally debated as both kept on squabbling that the debate moderator had to intervene.

Market couldn’t get much out of the debate and futures started to sell down after that only to recover on news of stimulus.

For now polls show Mr Biden leading and Trump has probably has to take the rest of the debate seriously in order to swing votes to his side.

Now what can we expect from now till Nov? VOLATILITY! As the race to the white house is not conclusive yet, both parties stand a good chance to win. As such, market could swing during this period so do be aware. As Trump is pro market, pro business if he’s firmly in the lead, markets could favour that. On the other hand, if Biden is in the lead, market might not like it as they will have to adjust to a new president, new policies and more regulations.  Election news might overtake covid news for the time being as traders shift their focus for the time being.

-So for short term traders, do be nimble, adjust your expectations during this period. Don’t be greedy during this time or stay out when it’s too uncertain.  Gold could also be a trading idea as some might flock to there for safety.

-For longer term investors, take the chance to position yourself during the dip on strong companies with good fundamentals.  In the long run, market tends to move up. Index ETFs are good alternatives if single stock exposure is not your cup of tea.

So what happens if Donald Trump wins? 

1. As trump favours deregulation, low interest rates environment, low tax rates so those industries like financials, traditional energy , military (Lockheed Martin) and healthcare like GSK and Pfizer might benefit.
2. Sector to avoid would probably be some China tech that Trump has aimed. As there is uncertainty in Trump’s policy on the trade war and it might be better to avoid those companies with China exposure or manufacturing in China as these companies might suffer from the tariffs
3. We might see some certainty in the markets as Trump is pro markets and always credits himself for how the market has performed. S&P has made an all time high despite Covid, got to give it to this man. Traders are also used to Trump’s way with the exception of an increased post election trade escalation and of course his famous tweets.

So what happens if Joe Biden wins? 

1. As Biden is more for tax hikes, regulations or some even say anti-growth, this might take a hit to the markets. Plus the fact it’s a new President and markets dislike uncertainty.
2.  Biden is also more for renewable , sustainable energy, infrastructure and manufacturing. He focus on environmental issues so companies related to clean/renewable energy like solar could benefit.
3. Financials could be affected due to more regulations and tax  hikes.
4. Although Biden’s trade war stance is not as erratic as Trump’s he had not committed to removing the tariffs.

It’ll be an interesting month leading up to the elections so stay tune as we update more on index in the coming days. Stay tune.

Yours

Humbly

Kelwin&Roy