US election reaction: closer than expected race has jolted markets

Summary

US investment strategist Mona Mahajan explains how the US presidential election has not delivered the anticipated Democratic blue wave, and markets have been jolted by how close the race now appears.

Key takeaways

  • US 10-year Treasury yields have seen a 10-point reversal, reflecting a flight to safety which has also seen the US dollar rise and gold prices fall.
  • Cyclical and value stocks – which had performed well in recent days in anticipation of increased fiscal stimulus from a Democrat victory – have flattened while tech stocks have been boosted by the possibility of a better business environment and lower tax regime.
  • Filmed at 11:30 EST on 3 November.

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About the author

Mona Mahajan

Mona Mahajan

US Investment Strategist

Mona is the US investment strategist and a director with Allianz Global Investors, which she joined in 2017. As a member of the Global Economics and Strategy team, she is responsible for providing US retail and institutional clients with differentiated investment thought leadership.

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US elections: race is far tighter than expected – again

US elections: race is far tighter than expected – again

Summary

While the results are not yet final, the 2020 US presidential race is much closer than the polls and betting markets predicted. Investors should expect some flight-to-safety response in areas like US Treasury bonds and the dollar, and technology may perform well if President Trump secures victory again.

Key takeaways

  • At this stage, the results of the US elections indicate that President Trump is more competitive in key swing states than markets or polling had indicated
  • While there may still be a path to victory for Democratic candidate Joe Biden, this would come through key swing states that may take days to count votes, like Pennsylvania, Michigan and Wisconsin
  • Markets may continue to respond favourably to a potential second term for Mr Trump, focusing on his more business-friendly policies and lower tax regime overall; sectors like technology and financials may especially benefit
  • Investors have reasons to be optimistic heading into 2021: once a result is known, the backdrop of rising economic growth, low rates, and stimulus should be good for stocks and other risk assets
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