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Week ahead: Biden win tipped to deliver boost to stock markets and economy

Suban Abdulla
·6-min read
WILMINGTON, DELAWARE - NOVEMBER 07:  President-elect Joe Biden addresses the nation from the Chase Center November 07, 2020 in Wilmington, Delaware. After four days of counting the high volume of mail-in ballots in key battleground states due to the coronavirus pandemic, the race was called for Biden after a contentious election battle against incumbent Republican President Donald Trump. (Photo by Andrew Harnik-Pool/Getty Images)
President-elect Joe Biden addresses the nation from the Chase Center November 07, 2020 in Wilmington, Delaware. The race was called for Biden after a contentious election battle against incumbent Republican President Donald Trump. Photo: Andrew Harnik-Pool/Getty Images

Following a tumultuous few weeks, the US election aftermath will keep investors busy next week, along with the coronavirus pandemic and Brexit.

After four days of counting votes, Democrat Joe Biden has been touted the victor of the 2020 US presidential election.

The president-elect clinched victory after winning the key battleground of Pennsylvania on Saturday, which pushed him over the 270 electoral college votes threshold.

So far, Biden has won more than 73 million votes, the most ever for a US presidential candidate.

Biden said he is “honoured” that America has “chosen me to lead our great country”, adding that it is time for America to “unite and heal.”

Meanwhile, vice president-elect Kamala Harris has made history as the country’s first Black, South Asian and female VP.

But, markets will be braced as the legal and political wrangling spills into the new week.

US president Donald Trump, who has yet to concede defeat has shown he won’t go down without a fight saying “this is far from over.” Trump who has already filed multiple lawsuits has also falsely accused Biden of election fraud.

Following Biden’s projected win the CEO of one of the world’s largest independent financial advisory organisations, said that the president-elect will boost to global markets and economies.

“President-elect Joe Biden will deliver a boost to global stock markets and the US and world economy,” Nigel Green, CEO and founder of deVere Group, said.

Green added: “Although a Biden win was pretty much priced-in by the markets, his victory will eliminate uncertainty — which they loathe — and they will rally further as a result.

“Even possible legal challenges from Trump will be dismissed by investors who will instead be focusing on the renewed certainty and stability that a Biden White House will bring, including in key areas such as trade tensions with China, keeping the US in the World Health Organisation, resigning the Paris climate agreement, and abiding by other international agreements and long-standing international allies.”

Watch: Profile of US president-elect Joe Biden

While the election was in focus, the number of daily COVID-19 infections surpassed 100,000, and continue to grow in the US.

The Republicans have held their majority in the Senate. While Biden could face some opposition, he has often boasted about the fact he can “work with anybody.”

The president-elect, came up in the ranks of the Senate along with current leader Mitch McConnell — they are also friends.

A working relationship is needed to secure fiscal stimulus in order to boost the economy post-coronavirus.

Green says, that “some package is likely,” but that Biden might struggle to get the $3tn (£2.3tn) wanted by Democrats.

“This will buoy the markets and would have investors think about a broader-based economic recovery — rather than a narrower, tech-heavy one.

“As the world’s largest economy, sustainable, long-term growth in the US will have a positive ripple effect for the world economy.”

So far, talks between House speaker Nancy Pelosi and US treasury secretary Steve Mnuchin have been deadlocked. The deadline for reaching a stimulus deal is 11 December.

Other releases include, inflation and unemployment claims on Thursday and consumer sentiment on Friday.

Elsewhere: OPEC’s monthly Oil Market Report is on the slate for Wednesday.

UK: Third quarter gross domestic product (GDP) data, Brexit

LONDON,UNITED KINGDOM - SEPTEMBER 16:  Close up of British Currency on September 16,2020 in London,England. (Photo by Peter Dazeley/Getty Images)
UK’s chief negotiator David Frost and his EU equivalent Michel Barnier are set to meet for talks in London from Monday. Photo: Peter Dazeley/Getty Images

Brexit is back in the headlines after what seems like a few weeks of silence, with the 15 November deadline for a deal fast approaching.

On Saturday, UK prime minister Boris Johnson and European Commission president Ursula von der Leyen agreed to “redouble” on efforts to reach a Brexit trade deal.

Johnson told his EU counterpart that “significant differences” remained, particularly when it comes to the issue of fisheries and a level-playing field.

UK’s chief negotiator David Frost and his EU equivalent Michel Barnier are set to meet for talks in London from Monday.

The October Claimant Count Change report, including an unemployment rate that could creep up from 4.5% to 4.7%, is on the slate for Tuesday.

Thursday will see how Britain’s economy is doing amid the pandemic when Q3 GDP figures are released.

Analysts are expecting growth between 15% and 17%, compared to the 20.4% collapse seen in Q2.

GDP bumper growth is anticipated in Q3 on the back of the summer reopening process as well as the Eat Out to Help Out scheme.

However, any Q3 gains will likely be wiped out in the fourth quarter following October’s increase in coronavirus restrictions, as well as the four-week England lockdown from 5 November to 2 December.

Key company results:

  • Persimmon (PSN.L) — interim (Tuesday)

  • Premier Foods (PFD.L) — half-year (Tuesday)

  • JD Wetherspoon (JDW.L) — Q1 (Wednesday)

  • Burberry (BRBY.L) — half-year (Thursday)

  • ITV (ITV.L), Farfetch (FTCH), National Grid (NG.L) — Q3 (Thursday)

EU: COVID-19 hangover and Germany data

European Union Flags
Optimism from the bloc’s biggest economy was prematurely based on the assumption that the world could avoid a second COVID-19 wave and subsequent lockdowns. Photo: Getty

The Eurozone economy enters another week of market uncertainty after multiple nations such as, economic giants France and Germany imposed tighter lockdown restrictions, including second national lockdowns.

On Saturday, Denmark announced strict new lockdown measures and a nationwide cull of millions of minks bred in the country’s 1,139 mink farms after authorities discovered a mutated virus strain. which can be transferred to human in the animals.

Following the news, Britain moved to ban entry for all non-British national or resident travellers who have been in or transited through Denmark in the last 14 days. UK also put the country on its travel corridor list.

On Tuesday, the EU targets the imposition of nearly $4bn in tariffs on US goods in retaliation over illegal aid to Boeing (BA).

In terms of figures, the Sentix Investor Confidence figure is on Monday, with the German ZEW economic sentiment numbers and Italian and French industrial production readings on Tuesday, region-wide PMIs on Thursday and a flash GDP figure on Friday.

A bleaker picture is expected from the latest German ZEW survey than was the case in October, when numbers fell sharply from the 20-year peak of 77.4 in September — to a five-month low of 56.1.

Optimism from the bloc’s biggest economy was prematurely based on the assumption that the world could avoid a second COVID-19 wave and subsequent lockdowns.

Instead, as Germany announced more restrictions for next month sharp falls in November numbers with an estimate of 40 is expected.