In the United States, the counting of votes is underway, and according to forecasts, the new President of the United States will be Joe Biden. The Senate will be dominated by the Republicans and the Democrats will prevail in the House of Representatives. Such a result was liked by investors on Wall Street.
A good scenario for the stock exchanges
Yesterday American stock indices skyrocketed and technology companies were among the leaders. The Nasdaq 100 index has grown the most since April, at one point reaching over 5% growth. For American companies, such an election result would be very good because it would make it practically impossible to raise taxes on corporations, capital gains or the richest that Joe Biden was planning to introduce.
Thus, the U.S. stock index futures continue to grow today, while votes continue to be counted in Nevada, Arizona, Pennsylvania, North Carolina and Georgia. Currently, Joe Biden won 264 electoral votes after winning in Wisconsin and Michigan, while Donald Trump won 214 votes and has already filed lawsuits and demanded a recount.
Investors are assessing the likelihood of an impasse in Congress that will make the adoption of the stimulus package more difficult, but also make major policy changes less likely. At the moment, the difficulties in introducing changes in taxes are more important for the market than the size and time of introducing a fiscal package for the American economy.
The Federal Reserve will not touch the interest rate
Investors are also waiting for the Fed's decision on monetary policy. However, the market does not expect changes in the interest rates of federal funds, although the central bank will probably repeat its commitment to do everything it can to help the economy. Thus, the way may be opened for further application of unconventional methods of monetary policy loosening in the U.S. and for a repetition of the importance of assistance from fiscal policy.
The Crypto season
Bitcoin starts to attract attention again. Its price has already exceeded $14,500, which means it has already reached its 2018 level. Thus, crypto enthusiasts are looking increasingly towards the high of all time in 2017, which was established in the area of 20 000 USD.
It is said in the market that it is the increase in interest in derivatives that is responsible for the recent strong bitcoin rally. The number of open positions on the futures and options market is expected to increase on the crypto exchanges, which may increase prices on the base market. However, this also carries the risk of increased volatility in the future due to leverage and margin.
Since the beginning of the year, bitcoin in relation to the US dollar has gained over 100 percent, which makes the crypto market seem to be the most profitable in 2020. This category is followed by natural gas, Nasdaq 100 and silver with rates of return of around 37%.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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