Democratic win in Georgia increases ‘blue wave’ nerves
A Democratic win in Georgia will ‘rattle’ US stockmarkets as the White House, Senate and House of Representatives could all be under Democratic control.
In a run-off election, Democratic candidates Jon Ossoff and Raphael Warnock both appear to havewon their seats which meant the Senate would be evenly split 50-50. This subsequently would leave vice-President elect Kamala Harris with the tie-breaking vote.
If all three organisations were under Democratic control, this would be the first time since 2009.
This would unnerve the stockmarket who were cautious about the ‘blue wave’ of Democratic policies. Biden’s policies included an increase in tax rates and larger fiscal stimulus policies which not historically market-friendly and markets tended to perform better when there was a split between the two parties.
Nigel Green, chief executive of deVere Group, said: “Investors will be jittery that control of the Senate will allow Biden to push through his agenda, including on major issues such as healthcare and environmental regulations - which are contested by Republicans - and enable him to roll back some of Trump’s business-friendly policies.
“Controlling the Senate will pave the way for Democrats to implement higher taxes to pay for greater stimulus spending – and this, in turn, will drive legitimate concerns of higher inflation.
“Ultimately, the markets were hoping for a divided congress, as Biden winning the presidency brings stability and certainty, but with the Senate staying Republican to temper some of his agenda. Historically, stocks perform better when one party controls the Senate and the other controls the House.”
AUTHOR
Laura Dew
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