With a US presidential election now only a year away, banks are starting to analyze the stock-market risk and potential of candidates.
A Democratic Party nominee has yet to be chosen, but it looks like a close race between Elizabeth Warren and former vice-president Joe Biden – with Bernie Sanders and Pete Buttigieg in third and fourth place.
RBC Capital Markets released a report in October that pointed out that a possible Democrat victory is giving some concern to investors, given that Warren, Biden and the majority of the party’s other candidates say they will bring in higher taxes and stricter regulations.
In particular, Warren is singled out by the report’s author, Lori Calvasina, head of US equity strategy, as being “extremely challenging for stocks from a bottom-up perspective” when coupled with a Democrat Congress.
Investors surveyed by RBC see healthcare, financial and technology stocks as those that would take the biggest hit if Warren were elected.
Calvasina expects stock markets to get jittery about the November election results as early as the end of the first quarter of 2020.
However, RBC’s analysis shows that a Democrat president with a split Congress has historically produced the best S&P returns of all political combinations.