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In the United States, Democrats are gaining power in both the House of Representatives and the Senate, while the United States Congress finally agreed to the $ 900 billion support package that got stuck in the decision-making process. this autumn.
This had an immediate effect on the world’s stock markets. In addition, the positive wave is also reinforced by the signed agreement of the Brexit negotiations in the eleventh minute.
“Rising Interest Rates Raises the Banking Sector”
“From the perspective of the stock market, we believe that the outcome of the elections is favorable. For example, Democrats want to give American households a one-time check for $ 2,000, which is significantly more than the $ 600 that was relevant in the negotiations with Republicans, and additional unemployment support that expires in March will be easier to do. extend again. Prospects for further stimulus and higher growth have caused interest rates to rise over the past week and cyclical sectors such as energy, manufacturing and materials have developed strongly. Rising interest rates have also given the bank a boost, ”writes Maria Landeborn, senior strategist at Danske Bank.
“The stars in the right place”
“Many stars have been right in the stock market sky lately. 2020 ended in important terms for Europe because the EU and the UK managed at the last minute to agree on a Brexit deal, and for the US side because Congress finally agreed on the design of a support package worth 900 billion euros. dollars, ”writes Maria Landeborn.
The policies of the Democrats, on the other hand, are not as market-friendly as those of the Republicans. Biden’s election promises include higher taxes and stricter regulations of various kinds. But initially, the new government’s policy is about stimulating the economy, not adjusting it, he believes.
“An advantage of the narrow majority of Democrats is also that the most controversial proposals, such as large tax increases and tough regulations, can be difficult to pass because they do not have the support of all Democrats,” Landeborn writes.
“Companies with structural growth invest”
The sectors that benefit the most and suffer the most are the emerging group of green companies, but cyclical sectors are also among the winners. This is due to the serious situation of the pandemic, which means that “companies with structural growth remain in the portfolio.”
But many IT companies will also benefit in the new year, according to Landeborn, because it takes time to vaccinate millions of people. While waiting for “herd immunity”, for example, IT companies continue to benefit from digitization.
Therefore, Danske Bank maintains an overweight position in the information technology sector, while the banking sector has moved from overweight to a neutral weight in Danske portfolios.
There is also a slight dominance in industry and materials, which is benefiting from increasingly strong global growth from mid to late 2021.
