Blue wave election win to have mixed implications for equities – Goldman Sachs

Analysts at Goldman Sachs offer scenarios on a ‘blue wave’ election win and their implications for equities and the US dollar.

A blue wave win implies a Joe Biden win at the 2020 Presidential election.

Key quotes

“Our market views remain broadly procyclical, consistent with our above-consensus global growth forecast. While a blue wave would have mixed implications for broad US equity indices.”

“See a negative in the form of a sizable increase in the corporate income tax rate by up to 7 percentage points. But positives would likely result in a substantially easier US fiscal policy, reduced risk of renewed trade escalation and a firmer global growth outlook.”

“These shifts should be clearly positive for cyclical sectors, as well as firms that pay most of their taxes outside the United States.”

“In addition, we would expect a material backup in longer-term sovereign bond yields as well as support for our standing forecasts of higher commodity prices and a weaker US dollar.“