The upcoming presidential debate is giving nervous jitters to a lot of investors. It is expected that there will be a record-breaking audience this Tuesday for the first presidential debate between the Democratic nominee Joe Biden and current President Donald Trump.
Depending on which of these candidates come out on top, the stock market will react either highly or very poorly. Most of it depends on what policies these candidates discuss.
What are experts saying about it?
There might not be a dramatic rise or fall in the stock market right after the debate has commenced. But there will be a definite change in the polling data once the debate has completed, which will trickle into the stock market as well.
Experts predict that if there is a significant lead of Joe Biden over Donald Trump, that can be significant. According to the RiverFront investment group, the investors need to be wary about the market outcome for the few days after the debate.
Although if you follow precedence, there is not a dramatic rise or fall after the first presidential debate, even though it is one of the most-watched events in the entire election. The maximum fall the S&P 500 index had on a day following the presidential debate was minus 0.14%.
How are the experts interpreting the stock market change?
If current president Donald Trump gets a second term, analysts predict that there will be a definite positive outcome for the stock market. Whereas, if Joe Biden wins, that could be a setback.
Considering that Democrats are also going to fight to take back the control of the Senate, which now has a Republican majority, this uncertainty is going to cause unrest in the stock market as well.
The biggest reason the stock market prefers Trump over Biden is that his 2017 corporate tax cuts will be in the rule if he is likely to be president. He is also on the warpath against China and pushing for more spending on various infrastructure projects. Both of these are indicative of high stock market returns.
Although Joe Biden also wants to increase spending on infrastructure, he has already expressed his intention to roll back the corporate taxes and tax wealthy people highly. This is an indicator that he will increase regulations on certain industries and sectors, banking, and medical care. Going on the opposite route as Donald Trump, he is much less likely to add more tariffs against China or any other European trading partners, which could be much better for global economics.
Why is the stock market favoring Donald Trump?
Considering the widely varying policy differences between the Democratic nominee and Republican president, it can be clued in that the Democratic administration is not going to be favorable for business in the upcoming years. However, Victoria Fernandez, the chief market strategist of Crossmark global investment, has also added that since the economy is already suffering a lot because of COVID 19 pandemic, she does not expect a lot of change in the market.
Biden is ahead of Trump by 6.7 percentage points on the polls, which has been consistent since Late July. He is also getting a small lead on some of the battleground states, which were very specifically going to be with Donald Trump because they are red states.
Just as the debate comes closer, investors feel nervous jitters for how the stock market is going to perform. Ever since Donald Trump declared that he would replace Ruth Bader Ginsburg’s seat with Republican justice Amy Barrett, this uncertainty has only grown. Besides that, since Donald Trump has also declared that he is not going to commit a peaceful transfer of power after the election, investors certainly have a lot to think about.
Contested elections are always bad for business, which can throw the whole market into turmoil for weeks. Presidential debates are highly watched and highly influential in their outcome. Overall, the Nasdaq composite has gained 1.1% this week after a strong fall for three weeks, which is a positive indicator for Donald Trump.