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NEW YORK: Investors and financial executives breathed a great sigh of relief Saturday after major networks declared Democrat Joe Biden the winner of the U.S. presidential election, offering some certainty after days of conflicting reports on who could rule the U.S. White House the next term.
Although incumbent President Donald Trump said he would fight the results in court, Wall Streets who offered comments felt there was little doubt that Biden would ultimately succeed. Election predictors, including the Associated Press, NBC, Fox News and Edison Research, on which Reuters relies, called for the presidency for Biden.
“Biden is good news for the markets,” Christopher Stanton, chief investment officer at Sunrise Capital Partners, said Saturday. “We are all so tired of the whip that came with Trump’s tweets.”
Major US stock indices posted their biggest weekly gains since April this week, as investors bet Biden would win and Republicans would stay in the Senate. That scenario would create a firmer hand in the Oval Office and a Congress that would curb left-wing impulses on taxes or regulations that squeeze businesses, investors said.
However, there are lingering risks to asset prices in the days and weeks ahead.
Republicans have already filed several lawsuits over the vote count, and Trump said his campaign will present more. The litigation could lengthen the electoral procedures.
Investors’ attention is also now focused on the Senate, which remains undecided heading into the two runoff elections in Georgia on January 5. Representatives, it means that January is “the new November” in terms of electoral volatility risk, Michael Purves, founder and CEO of Tallbacken Capital, said in a note to clients. Purves said that was evident when looking at contracts for the stock market fear indicator, the VIX, which runs into the months to come.
Beyond those battles, investors have been concerned about the people Biden could appoint to his cabinet. Some of those officials would be negotiating with Congress on an aid package and would have broad powers to make Wall Street rules.
The name of the current US Federal Reserve Governor and former McKinsey consultant, Lael Brainard, has come up as a potential Treasury Secretary, while Biden has already turned to the former derivatives market regulator and Goldman Sachs banker. Group Inc, Gary Gensler, for advice on financial regulation.
For the moment, Wall Street investors and prominent figures said they were happy with the call for the election after what seemed like never-ending tension as ballots were counted throughout the week.
“Now is the time for unity,” JPMorgan Chase & Co Chief Executive Jamie Dimon said in a statement. “We must respect the results of the US presidential election and, as we do with all elections, honor the decision of the voters and support a peaceful transition of power.”
Leon Cooperman, a former billionaire hedge fund manager who had previously criticized Democrats, said he was pleased with the results.
“It is a signal to the world that America has not changed its values,” said Cooperman of the Omega Family Office. “That’s a good thing in my opinion.”
Robert Wolf, a top Democratic donor and former UBS Group AG executive who now heads 32 Advisors, was enthusiastic: “I am ecstatic, relieved and deeply hopeful for the future of this country,” he said in a text message.
Billionaire investor Bill Ackman wrote on Twitter: “There comes a time in battle when one must fold the tent,” and exhorted: “Grant gracefully and cry out for unity.”
The financial industry was not reacting in a bubble: Major cities from New York to San Francisco burst into celebration on Saturday. While Trump certainly has significant support across the country, including on Wall Street, 2020 has been a difficult year for America.
The coronavirus pandemic has taken a huge toll on the country, killing some 236,250 people so far, while social unrest over the police killing of George Floyd, a black man, has only hardened divisions that already existed.
Many voters expected a decisive election that offered some calm, regardless of which candidate they voted for.
Mohamed El-Erian, the Allianz Group’s chief economic adviser, said he hoped the Biden administration would be able to work with Congress to bring the pandemic under control and pass an economic stimulus package for struggling Americans.
“The country needs to come together to better deal with an increase in Covid infections that risk the loss of more lives, greater disruptions to livelihoods and long-term economic, institutional and social scars,” he said. – Reuters
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