JPMorgan Says Trump Win Could Spur U.S. Stocks, Dent Asia Assets
Bloomberg
Published Oct 28, 2020 02:08AM ET
Updated Oct 28, 2020 02:36AM ET
JPMorgan Says Trump Win Could Spur U.S. Stocks, Dent Asia Assets
(Bloomberg) -- A surprise election victory by President Donald Trump next week could benefit U.S. equities and the dollar while hampering Asian assets, according to JPMorgan Chase (NYSE:JPM) & Co.
That’s based on market moves after Trump unexpectedly won the vote in 2016, according to strategists including Nikolaos Panigirtzoglou. Democrat nominee Joe Biden is currently leading in polls but Wall Street firms have recently cautioned against assuming he will beat Trump.
The JPMorgan strategists said it’s reasonable to expect an echo of the fallout from four years ago if Trump wins, such as a favorable market reaction for American equities compared with non-U.S. stocks, a decline in Asian currencies and the underperformance of Asian shares relative to global peers. They also see the potential for a rise in a trade-weighted gauge of the dollar.
“Asian assets are likely to be sensitive to a continued Trump Presidency as it would likely mean further U.S./China conflict on trade, technology and investments,” the strategists wrote.
While polls and prediction markets give Biden the edge, analysts also remember how Trump shocked many pundits and markets by defeating then-favorite Hillary Clinton in 2016. Some investors have positioned not just for a Biden victory, but also a so-called “Blue Wave” where Democrats take control of the Senate while retaining the House of Representatives.
Other assets might break away from the patterns seen in 2016. For instance, there’s less scope for gold to drop this time around, JPMorgan said.
There might be “some pressure for further steepening” and increases in 10-year yields though not of the same magnitude as four years ago, when markets were starting to price in the possibility of significant deficit-financed tax cuts, the strategists said.
Infrastructure initiatives haven’t been a focus area for the Trump campaign, suggesting less scope for a rally in copper compared to four years ago, they said.
©2020 Bloomberg L.P.
Get The News You Want
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.