The bass riots in the US yesterday The assault on the Capitol by supporters of Donald Trump could have triggered a day of strong turmoil in the main financial center of the world, in view of the political tension experienced in the country. However, Wall Street not only reacted calmly, but the Dow Jones, one of the main indices of the New York stock market, reached all-time highs of 31,022 points throughout the day.
The same has happened in the opening of the European stock markets, all of them with rises that have been deflated in the first bars of negotiation. But not precisely because of the political tension experienced yesterday, but because of the ballast of tourist values, showing that other factors such as the impact of the pandemic outweigh an event that, for very historic and serious in democratic terms Whatever it is, it is not going to prevent Joe Biden from assuming the US presidency on January 20.
In other words, the markets, which always discount future expectations, have chosen to take for granted that the assault on the Capitol on January 6 was a punctual blow, but in the long term what will continue to drive the decisions of investors and large funds will be the economic plans of the new president of the country and how these will affect the business results of the listed companies in their portfolio.
A short term scare
“After the riots in Washington DC, the electoral vote counting continued and it was only a matter of time before Congress officially ratified Joe Biden as president-elect,” explain Julius Baer analysts.
Bankinter’s analysis department agrees that “the conflict has been almost ignored by a market that is excited about more stimuli “. An illusion that responds, in fact, to a positive interpretation of the Democratic victory in the Senate by winning the two senators for Georgia in Wednesday’s elections.
These elections have been the ones that have really moved the stock markets in recent sessions, and investors have reacted upwards to the forecast that control control of both camerasIn addition to the presidency itself, suppose more generous stimuli for the economy.
In the same way, the tight Democratic representation means that Biden will also not have an easy time passing certain measures that do not usually sit well with the bags, such as the rise in corporation tax planned to finance more public spending.
“It is perhaps the ideal scenario. A 50/50 +1 majority in the Senate could be just what the doctor prescribes: Enough to get more stimuli through, but not enough to get the tax hikes done, ”explains Jack Janasiewicz, portfolio manager at Natixis. Investment Managers.
“This constructive vision is imposed, for now, ignoring the consequences of the riots in Congress that prevented the bicameral session from confirming Biden’s victory (something that has already happened today), as well as the risks of more taxes and regulation that this greater freedom may bring to the Democratic presidency, ”Bankinter experts indicate.
In other words, with Wall Street futures on the rise, if the market finally turns around and ends up trading in the red today, it will be more due to the fall in values affected by the Biden’s fiscal and economic policy proposals (like the technological ones), and not because of the assault on Washington. Even for a profit taking after the increases on Wednesday. But the vision of the experts in the medium term remains bullish. And Trump’s insurrection will not be enough to change that assessment.