Democratic nominee Joe Biden has a 54.6% chance of winning the presidential election compared to President Donald Trump who has a 44.5% chance, ahead of their first debate Tuesday, according to RealClearPolitics.
That represents Biden’s highest percentage since Aug. 25, when the Republican National Convention aired on television. By the following week, Biden’s odds crept up in the betting market to 50% compared to Trump’s 49.5%.
RBC Capital Markets chief U.S. equity strategist Lori Calvasina has examined the connection between the U.S. presidential election betting markets and stocks. For a year leading into the second quarter of 2020, she said the S&P 500 index has been in sync with the odds of Trump winning.
Then stocks broke from that trend as Biden began to pick up steam this summer. By late August and early September, however, Trump regained momentum.
Calvasina said while the stocks traditionally perform well with Democrats running all three branches of government, the year’s election has brought on a reversal in that trend.
“RBC’s US equity analysts see a Biden victory/Democratic sweep as a negative event for 58% of the industries that they cover,” Calvasina wrote, according to Barron’s. “Investors have also been contemplating the possibility that the results of the presidential race won’t be known immediately,” pointing to a 12% drop after the 2000 election.
“With two candidates in their 70s,” Tom Block of Fundstrat wrote, “mental agility will be a focus as Americans watch.”
Block said Trump’s edge could be in his background as an entertainer.
“He is a pro at the quick quip, whether it is true or not, and putting the VP on the defensive,” Block wrote, according to Barron’s. “But the president has such confidence in his ability to debate that he is unlikely to spend much time preparing; in my view preparation will be the advantage Biden brings to the stage. The VP will have hours of mock debate sessions and will execute a carefully thought-out strategy; while the president will go by instinct for the kill.”
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