Investing.com – During the first US presidential debate, held on the night of Thursday, June 27, current Democratic President Joe Biden failed to convince the audience that he has the ability to lead the world’s largest economy in a second term to continue to lead. Quite the opposite. The meeting was more favorable to Republican Donald Trump, who is seeking a second non-consecutive term in the Nov. 5 election.
A survey published by the American network CNN shows that 67% of the public thinks Donald Trump performed better in the debate compared to the 33% who gave the victory to Joe Biden. In addition, 57% of the people consulted indicated that they do not trust Biden to be able to lead the country, compared to 44% who do not trust Trump. Before the debate, this share was 55% and 47% respectively.
With these snapshots of the presidential race, analysts from investment bank UBS anticipate a volatile environment in the markets, as well as reactions to possible scenarios that could emerge from the US electoral process, also given the outcome in the legislature.
“The composition of Congress is a key component in assessing the likelihood that any policy will be implemented. This is especially true in the case of fiscal and social policies, where the role of Congress cannot be ignored,” they explained in an analysis note.
What if Joe Biden wins?
“A Biden administration would try to raise taxes on the wealthiest Americans. However, the ability to do this will likely be limited by a Republican Senate, once again leading us to a compromise on taxes,” they explained.
- With a Democratic majority in Congress
Analysts warned that a Biden presidential victory and a Democratic majority in Congress could be the most negative outcome for stock markets, as it would increase the likelihood of a corporate tax hike.
“The expiration of a number of personal tax cuts in 2017 could also put a slight brake on consumer spending. “Regulatory pressures could increase in some sectors, but overall this would be more of an extension of the status quo,” they said.
UBS expects that if Biden wins but Congress is divided, we can expect much more limited policy changes and a more muted impact on financial markets.
“A Biden administration would be forced to rely heavily on executive action and regulatory oversight,” they said.
ANTICIPATE EPISODES OF VOLATILITY: If you want to find the strongest stocks on the market with a minimum investment, use the coupon ELECTIONS 24 to obtain an exclusive discount of up to 50% on our 1 and 2 year olds InvestPro plans through by clicking on this link
What would happen if Donald Trump wins?
“Trump has repeatedly expressed support for tariffs and sees them as opportunities to benefit from concessions from both adversaries and allies. Based on the actions taken during his first administration, we assume higher rates will apply. “While its imposition increases treasury revenues, it does so at the cost of renewed inflationary pressures and geopolitical friction,” they noted.
- With a Republican majority in Congress
Analysts at UBS expect that there is likely to be an extension of the 2017 tax cuts, with a possible further reduction in business rates.
“Funding for these initiatives could come from a reduction in support for the Inflation Reduction Act’s green energy provisions,” they explained.
From their perspective, UBS expects that equity markets would likely welcome lower taxes and lighter regulation, but this would be partially offset by concerns about the costs and inflationary impact of higher tariffs and trade wars.
“Initially, interest rates and the dollar will likely rise. The financial sectors stand out as the main potential beneficiaries in this scenario due to lighter regulation,” they say.
Strategists warned that such a scenario would mean blocking major changes in fiscal policy, as well as higher rates and lighter regulations.
“Overall, these two forces would have a mixed impact on equity markets. The dollar and interest rates would likely rise moderately. The financial sector would likely be the biggest beneficiary of lighter regulation,” they explained.
In an environment of uncertainty, investors can take advantage of the opportunities in the stock markets
InvestPro subscribers can use tools such as watchlists that allow them to identify stocks that have the greatest potential for profit based on the market value assigned exclusively by InvestPro ‘s algorithms. Plus, they can look at average analyst price targets and find great investment opportunities at a bargain price.
With the ELECTIONS 24 coupon, you’ll get a spectacular discount when you sign up for our 1- and 2-year plans. Order it right now by clicking on this link!.
