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US Elections: Bull market remains intact in a divided-government scenario – Morgan Stanley

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It’s been a yr of dramatic swings and unpredictability, and the 2020 US election used to be no exception. But at least some readability is now in view, as President-elect Joseph R. Biden used to be declared the winner over the weekend by way of most media outlets. Foreign-policy shifts, world trade, the destiny of stimulus and the course of the coronavirus are simply a few of the variables that traders ought to think about as President-elect Biden prepares to take office, per Morgan Stanley.

Key quotes
“With Democrats now set to manipulate the White House, however congressional strength last divided, with a probable Republican-led Senate and Democrat-led House of Representatives, the possibilities of a large and greater proactive fiscal stimulus have diminished. That capacity overseas coverage may additionally see greater motion than fiscal policy. A Biden administration ought to be less open to a US-UK exchange deal and extra dedicated to the Good Friday Agreement – a peace accord between Northern Ireland and the Republic of Ireland – than the modern administration. Both elements should tilt the stability towards nearer UK alignment with Europe and enlarge the probabilities of a deal on Brexit. This would be bullish for the pound.”

“Reactive fiscal stimulus (or none at all) would additionally suggest that traits touching on to the pandemic would turn out to be greater crucial for markets. We’ll be intently gazing COVID-19 case numbers, which are rising once more in the US and Europe, and following growing information on a vaccine.”

“For US equities, the have an effect on of the pandemic and uncertainty on fiscal alleviation is one motive why we trust that the S&P 500, the large market benchmark index, will hover round the 3100-3550 vary via year-end, as markets digest these overlapping narratives.”

“We stay cautious on oil, given susceptible fundamentals, however have grew to become extra optimistic on a number of massive EU power majors.”

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