By Andrei Skvarsky.
U.S. asset manager Castlestone Management argues that Democrat Joe Biden’s victory in the Unites States’ presidential election and a Congress split between Democrats and Republicans after recent polls will most likely give a powerful boost to American stock markets.
Investment in equities normally increases after elections anyway, but, historically, having a Democratic president, a split Senate and a split House of Representatives have created the best environment for U.S. equity markets, Castlestone says in a presentation.
The Federal Reserve is planning to hold its rates at zero for the next five years. Hence interest rates are generally going to remain low for many years to come, “meaning equities are the only realistic place to make any return on your money”, the New Jersey-based asset manager says.
There will also be more certainty in global equity markets, the company forecasts.
The U.S. economy is slowly recovering.
While Covid-19 “will determine the pace of recovery”, gross domestic product (GDP) is climbing back to its pre-coronavirus levels, Castlestone says.
According to Reuters, U.S. pharmaceutical corporation Pfizer and its German partner BioNTech became the world’s first drugmakers on November 9 to show successful data from a large-scale clinical trial of a Covid vaccine.
The United States’ real GDP has consistently been stronger during the tenures of Democratic presidents, according to Castlestone.
Unemployment in the country dropped to 6.9 per cent in October.
Trade wars with practically the rest of the world unleashed by outgoing Republican president Donald Trump will come to an end, giving the United States opportunities for more trade deals and for global economic expansion, Castlestone predicts.
The Democrats hold a relatively narrow majority of seats in the House of Representatives while the Republicans have a comparatively small majority in the Senate.
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