US indices rise, supported by Biden's progress towards resolving the US elections
The markets started this week strong, based on the expectations of Biden's victory and the Democrats opened the way for the economic stimulus package that the American economy is looking forward to, but the (Standers & Poor's 500) index fell sharply when Trump hastily announced his victory and threatened to transfer the competition to the Supreme Court; This increased from the perspective of the continuation of the state of uncertainty about the election results, but the decline did not continue, as stocks rose again after Biden's victory became close. How do the US indicators perform in light of the heated elections?
Has Wall Street elected its president? The performance of US stocks reveals that reveals that
US stock indices rose in early trading on Wednesday, with preliminary results showing Biden's victory in the presidential election.
By 1:32 pm GMT, the Dow Jones Industrial Average rose by 0.8%, or 233 points, to record the level of 27,713 points
. After opinion polls indicated Biden's victory.
"Standard & Poor's" rose by 1.5 percent to 3422 points, and "Nasdaq" rose by about 2.8 percent to 11,474 points.
Shares of renewable energy companies predict the outcome of the elections .
The US presidential election boosted the performance of the stock of “Sunrun”, the largest solar energy company in America, which has risen more than 300% so far this year, to lead the rise of the assets of the Invesco Solar Energy Index Fund (TAN) more than double in 2020, in light of Candidate Joe Biden promises to eliminate carbon emissions from electricity production by 2035, which means the renewable energy sector will receive federal support.
And the American “CNN” network stated that the indicators of Biden’s victory led investors to get rid of the shares of traditional energy companies,
especially since ExxonMobil (XOM) is no longer the largest energy company in America in terms of market value,
as it was replaced by the solar and wind energy company NextEra Energy (NEE). ).
Biden breaks the record for the number of votes received by an American presidential candidate .
Democratic presidential candidate Joe Biden has broken the record for the number of votes a presidential candidate receives in the history of US elections.
And the American network, "ABC News", reported that Biden has received 72 million, 110 thousand, and 951 votes so far,
breaking the record set by former President Barack Obama in the 2008 elections, with 69 million, 498 thousand and 516 votes.
It is worth noting that the candidate can win the presidency of the United States despite not obtaining the largest number of votes;
Because the president is chosen by the so-called “electoral college”.
The Electoral College totals 538 votes, and to be a winner, a candidate must win 270 or more Electoral College votes.
So far, Biden has received about 264 votes compared to 214 for Trump, which is a positive indicator of Biden's victory.
Will US indices rise further if Biden wins?
In fact, the effect of Biden's victory in the presidential race on the stock market is different from the effect of his opponent's victory;
This is mainly due to Biden's budget plan, which proposes increased government spending and tax increases for companies and families whose annual income exceeds $400,000.
Biden's plan also calls for repealing the tax cuts law and raising the corporate tax rate from 21 to 28 percent,
which would reduce the value of dividends on Standard & Poor's 500 shares by 5 to 9 percent.
Additionally, there is a risk of nearly doubling the tax rate on capital gains and dividend income from 24 to 43%.
But why do US indices rise with Biden's progress?
The foregoing effect will be short-lived; As the expectation that the markets will rise is very likely, but in the long run, and this can be proven from several aspects
Approval of stimulus packages
The experts of the global investment bank "Goldman Sachs" indicated that the victory of Biden and the arrival of Democrats in the US Senate,
may prompt them to update their expectations about the US economy.
This may increase the possibility of obtaining a financial stimulus package of no less than two trillion dollars in early 2021,
followed by an increase in spending on infrastructure, green energy and vital sectors such as health and education,
which increases investor confidence and leads to increases in stock indices that outweigh the short-term increases resulting from Trump victory.
Expectations don't always come true
Many people believed that Trump's victory in 2016 would cause the stock market to plummet and the Dow Jones Industrial Average to drop by 900% as an initial result.
But after the election, the Dow Jones Industrial Average continued to rise until 2018.
So even predictions of the negative (short-term) impact of a Biden victory are not certain.
The economy has improved under the Democrats
Also, although many investors believed that the US stock market did better under Republican presidents;
Due to the Republican Party's focus on tax cuts, deregulation, and business-friendly policies,
indices have actually performed better under Democratic presidents (+9.7% annual returns) than they have done for Republican presidents (+6.7%) since 1945.
Although Republican President Donald Trump offered the financial sector huge tax breaks and deregulation gains,
his first term in office was marked by uncertainty and volatility, particularly in the area of international trade.
What if the announcement of the final result is prolonged?
Although Biden's victory is inevitable due to his superiority in the electoral college votes, the vote counting will continue for several more days.
Usually, elections that last for weeks; Negatively affect the financial market, as happened during the presidential battle of 2000,
in which George Bush Jr. faced Al Gore. During this period, there were several recounts of votes
and court decisions that resulted in market volatility, and the S&P 500 fell about 8%.
Under the current circumstances, the election results this time may be more controversial in light of the possibility of Trump challenging the results,
as well as due to the length of the count due to voting by mail.
Advice for investors after the election result is announced
In a report in the American newspaper "The Hill", writer Nicholas Sargin gave a number of advice to investors, asking them to be careful as soon as they know the outcome of the US election.
The writer advised not to overreact to the announcement of the winner, recalling that many people believed that Trump's victory in 2016 would lead to a stock market crash,
as the initial market response was a drop in the Dow Jones Industrial Average by nearly 900 points.
Then followed a massive recovery that lasted into 2018, as investors predicted that tax cuts and deregulation would lead to stronger economic growth.
The writer called for focusing on the potential economic policies that will be enacted, noting that there is often some manipulation of the details, and he said that at this stage it would be too early to know what legislation will be issued, and what will be deleted or abandoned, and here the importance of the results of the elections appears. Congress.
He also advised to maintain objectivity and not allow political convictions to influence the investment decision.
He noted that although the stock market reacted positively to the prospect of tax cuts and deregulation 4 years ago,
the trade war with China has contributed to increased market volatility,
adding that people are more likely to make better investment decisions if they are flexible and open to a range of possibilities. ,
than if they were hard-line in their belief about what would happen.
The markets started this week strong, based on the expectations of Biden's victory and the Democrats opened the way for the economic stimulus package that the American economy is looking forward to, but the (Standers & Poor's 500) index fell sharply when Trump hastily announced his victory and threatened to transfer the competition to the Supreme Court; This increased from the perspective of the continuation of the state of uncertainty about the election results, but the decline did not continue, as stocks rose again after Biden's victory became close. How do the US indicators perform in light of the heated elections?
Has Wall Street elected its president? The performance of US stocks reveals that reveals that
US stock indices rose in early trading on Wednesday, with preliminary results showing Biden's victory in the presidential election.
By 1:32 pm GMT, the Dow Jones Industrial Average rose by 0.8%, or 233 points, to record the level of 27,713 points
. After opinion polls indicated Biden's victory.
"Standard & Poor's" rose by 1.5 percent to 3422 points, and "Nasdaq" rose by about 2.8 percent to 11,474 points.
Shares of renewable energy companies predict the outcome of the elections .
The US presidential election boosted the performance of the stock of “Sunrun”, the largest solar energy company in America, which has risen more than 300% so far this year, to lead the rise of the assets of the Invesco Solar Energy Index Fund (TAN) more than double in 2020, in light of Candidate Joe Biden promises to eliminate carbon emissions from electricity production by 2035, which means the renewable energy sector will receive federal support.
And the American “CNN” network stated that the indicators of Biden’s victory led investors to get rid of the shares of traditional energy companies,
especially since ExxonMobil (XOM) is no longer the largest energy company in America in terms of market value,
as it was replaced by the solar and wind energy company NextEra Energy (NEE). ).
Biden breaks the record for the number of votes received by an American presidential candidate .
Democratic presidential candidate Joe Biden has broken the record for the number of votes a presidential candidate receives in the history of US elections.
And the American network, "ABC News", reported that Biden has received 72 million, 110 thousand, and 951 votes so far,
breaking the record set by former President Barack Obama in the 2008 elections, with 69 million, 498 thousand and 516 votes.
It is worth noting that the candidate can win the presidency of the United States despite not obtaining the largest number of votes;
Because the president is chosen by the so-called “electoral college”.
The Electoral College totals 538 votes, and to be a winner, a candidate must win 270 or more Electoral College votes.
So far, Biden has received about 264 votes compared to 214 for Trump, which is a positive indicator of Biden's victory.
Will US indices rise further if Biden wins?
In fact, the effect of Biden's victory in the presidential race on the stock market is different from the effect of his opponent's victory;
This is mainly due to Biden's budget plan, which proposes increased government spending and tax increases for companies and families whose annual income exceeds $400,000.
Biden's plan also calls for repealing the tax cuts law and raising the corporate tax rate from 21 to 28 percent,
which would reduce the value of dividends on Standard & Poor's 500 shares by 5 to 9 percent.
Additionally, there is a risk of nearly doubling the tax rate on capital gains and dividend income from 24 to 43%.
But why do US indices rise with Biden's progress?
The foregoing effect will be short-lived; As the expectation that the markets will rise is very likely, but in the long run, and this can be proven from several aspects
Approval of stimulus packages
The experts of the global investment bank "Goldman Sachs" indicated that the victory of Biden and the arrival of Democrats in the US Senate,
may prompt them to update their expectations about the US economy.
This may increase the possibility of obtaining a financial stimulus package of no less than two trillion dollars in early 2021,
followed by an increase in spending on infrastructure, green energy and vital sectors such as health and education,
which increases investor confidence and leads to increases in stock indices that outweigh the short-term increases resulting from Trump victory.
Expectations don't always come true
Many people believed that Trump's victory in 2016 would cause the stock market to plummet and the Dow Jones Industrial Average to drop by 900% as an initial result.
But after the election, the Dow Jones Industrial Average continued to rise until 2018.
So even predictions of the negative (short-term) impact of a Biden victory are not certain.
The economy has improved under the Democrats
Also, although many investors believed that the US stock market did better under Republican presidents;
Due to the Republican Party's focus on tax cuts, deregulation, and business-friendly policies,
indices have actually performed better under Democratic presidents (+9.7% annual returns) than they have done for Republican presidents (+6.7%) since 1945.
Although Republican President Donald Trump offered the financial sector huge tax breaks and deregulation gains,
his first term in office was marked by uncertainty and volatility, particularly in the area of international trade.
What if the announcement of the final result is prolonged?
Although Biden's victory is inevitable due to his superiority in the electoral college votes, the vote counting will continue for several more days.
Usually, elections that last for weeks; Negatively affect the financial market, as happened during the presidential battle of 2000,
in which George Bush Jr. faced Al Gore. During this period, there were several recounts of votes
and court decisions that resulted in market volatility, and the S&P 500 fell about 8%.
Under the current circumstances, the election results this time may be more controversial in light of the possibility of Trump challenging the results,
as well as due to the length of the count due to voting by mail.
Advice for investors after the election result is announced
In a report in the American newspaper "The Hill", writer Nicholas Sargin gave a number of advice to investors, asking them to be careful as soon as they know the outcome of the US election.
The writer advised not to overreact to the announcement of the winner, recalling that many people believed that Trump's victory in 2016 would lead to a stock market crash,
as the initial market response was a drop in the Dow Jones Industrial Average by nearly 900 points.
Then followed a massive recovery that lasted into 2018, as investors predicted that tax cuts and deregulation would lead to stronger economic growth.
The writer called for focusing on the potential economic policies that will be enacted, noting that there is often some manipulation of the details, and he said that at this stage it would be too early to know what legislation will be issued, and what will be deleted or abandoned, and here the importance of the results of the elections appears. Congress.
He also advised to maintain objectivity and not allow political convictions to influence the investment decision.
He noted that although the stock market reacted positively to the prospect of tax cuts and deregulation 4 years ago,
the trade war with China has contributed to increased market volatility,
adding that people are more likely to make better investment decisions if they are flexible and open to a range of possibilities. ,
than if they were hard-line in their belief about what would happen.
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