OP’s Saari: The best thing for the market could be a “tie” in the USA

Next next week, a new president will be elected for the United States. who will win Donald Trump or Kamala Harris? The information is also nervously awaited in the investment market. The market has been bumpy in recent weeks.

But which candidate, Republican or Democrat, would really be the best for the market? OP’s chief analyst Antti Saari has found out how the market has previously behaved after the US presidential election.

“In general, you can say that the result of the election is forgotten quite quickly, regardless of who wins. In general, it is enough for the market that whatever the direction is, that direction is known. After the elections, the path to growth is open,” says Saari.

The economy has generally received a boost from the elections: companies dare to invest when it is known in which direction the country is going in the next four years.

Before elections economic evaluators have once again considered how the candidates’ election promises would affect the various sectors of the economy.

In practice, according to Saari, the market has developed best when the US administration has been divided. That is, when the party of the winning president has not had a strong hold on Congress, or at least on both of its chambers.

“In such a situation, the executive ability of the president is quite weak,” says Saari.

Fulfilling campaign promises is difficult for candidates without strong support in both houses of Congress.

But why would a weak president be good for the market? Saari thinks that the reason is that there won’t be any big changes in the country then. The market likes stability and moving forward with the old settings.

What’s even more surprising is that market performance has actually been better under Democratic presidents than under Republicans. In advance, however, market forces usually wish for a right-wing president.

Saari thinks that the difference is above all due to chance.

“In the United States, there have been more economic recessions when a Republican has been president. The recession is probably not caused by the president per se. Numerous other things also affect course development more than the president,” says Saari.

The market from that point of view, the weakest option could be that Kamala Harris would win and still get a straight vote in Congress. He has promised to tighten regulation and corporate taxation.

On the other hand, the market also reacted positively to Trump’s election last time, after the initial shock had been overcome. Trump was first elected president in 2016.

During his period, share prices developed well.

Of course, the president of the United States also has an influence on the market on this side of the coin. The good development of the stock market in the United States is also dragging Europe along.

Shares on the Helsinki Stock Exchange rose by an average of more than nine percent a year during Trump’s previous term.

Trump on the other hand, he has promised to protect the US’s own industry with high import tariffs, and he can adjust them within certain frameworks without the support of the entire Congress. Has pursued a protectionist policy Joe Biden too administration.

“The United States is a big market for Finnish companies. 16 percent of the turnover of companies on the Helsinki Stock Exchange comes from the United States,” says Saari.

He still does not doubt that the companies will manage. Many Finnish companies already have production in the United States, and even more production can be moved there if it makes sense due to customs.

“I am more worried about European economies in that situation. In the end, the easiest option for all parties could be that Harris wins, but with a disunited Congress. Then things would remain largely as they are now”, Saari estimates.

So it would be a kind of draw.