S&P 500: Democratic victory in November to be net positive – JP Morgan

In the view of the analysts at JP Morgan, the US Democratic incumbent Joe Biden’s victory in the presidential election could render net positive for the US stock markets.

Key quotes

“The consensus view is that a Democrat victory in November will be a negative for equities … However, we see this outcome as neutral to slight positive.

Unlikely to wind back corporate tax cuts as much as expected.

Given the current economic weakness, business recovery and job growth are likely to be prioritized over policies that could dampen economic growth and perhaps even jeopardize the desired 2022 midterm election outcome.

 As such, the degree of corporate tax reversal may ultimately be lower than currently discussed.

Biden will boost infrastructure spending.

Will soften the rhetoric out of the White House on tariffs.

Increase the federal minimum wage, which will be net positive for S&P 500 earnings and largely offset the corporate tax headwind.

History suggests that challengers to an incumbent typically campaign at an extreme only to converge to the centre post-election.”