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It’s been a year of dramatic swings and unpredictability, and the 2020 US election was no exception. But at least some clarity is now in view, as President-elect Joseph R. Biden was declared the winner over the weekend by most media outlets. Foreign-policy shifts, global trade, the fate of stimulus and the path of the coronavirus are just a few of the variables that investors should consider as President-elect Biden prepares to take office, per Morgan Stanley.

Key quotes

“With Democrats now set to control the White House, but congressional power remaining divided, with a likely Republican-led Senate and Democrat-led House of Representatives, the chances of a larger and more proactive fiscal stimulus have diminished. That means foreign policy may see more action than fiscal policy. A Biden administration could be less open to a US-UK trade deal and more committed to the Good Friday Agreement – a peace accord between Northern Ireland and the Republic of Ireland – than the current administration. Both factors could tilt the balance toward closer UK alignment with Europe and increase the chances of a deal on Brexit. This would be bullish for the pound.”

“Reactive fiscal stimulus (or none at all) would also mean that developments relating to the pandemic would become more critical for markets. We’ll be closely watching COVID-19 case numbers, which are rising again in the US and Europe, and following developing news on a vaccine.”

“For US equities, the impact of the pandemic and uncertainty on fiscal relief is one reason why we believe that the S&P 500, the broad market benchmark index, will hover around the 3100-3550 range through year-end, as markets digest these overlapping narratives.”

“We remain cautious on oil, given weak fundamentals, but have turned more constructive on several large EU energy majors.”