January 19, 2021

Does the Spanish Stock Market win with the Democratic victory in the US Senate?


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He assault on the capitol It has not scared investors, and the main European stock indices started the day positive. Also in the Ibex although at this time it deflates negatively with the plummeting tourist values due to the uncertainty generated by the possible announcements of new confinements.

But generally speaking, the confirmation of the Democratic victory in the Senate The United States has boosted the markets, which feared a tie between Democrats and Republicans with the consequence of blocking new economic stimuli. «It is perhaps the ideal scenario. A 50/50 +1 majority in the Senate could be just what the doctor prescribes: enough to carry out more stimuli, but not enough to get the tax increases to take place, “explains ack Janasiewicz, portfolio manager at Nativis Invetment Managers.

Thus, with the control of the Congress and the Senate in the hands of the Democrats, the experts explain that the great beneficiaries in the markets will be the cyclical values, the renewable, companies dedicated to infrastructure and financial sector. In fact, the latter were the main protagonists yesterday before the victory announced and Wall Street pushed the Ibex banks that took the Spanish stock market above 8,300 points in its day with the highest rise in two months.

It also had an effect on Spanish renewables, which today also continue their particular bullish rally of the last year with the newcomer Solaria bringing the value of their securities closer to 30 euros, while Iberdrola it grows above 1% and Siemens Gamesa 3%.

Possible fall of technology

As for the losers, from Nativis they point out that in the US defense values, fossil fuels and pharmaceuticals and technology will fall. The possible fall of the technological ones that have guided in the year of Covid-19 to record positions to the indexes of Wall street. “Technology has a target on its back. For privacy reasons; antitrust; freedom of expression. Etc. Democrats seem to be more focused on antitrust and taxes making technology pay its fair share. We will have to see how this evolves.

As for the dollar, the manager points out that the value of the “greenbacks” is likely to continue to decline and this will benefit assets with another currency. The Federal Reserve Won’t Blink: They’ll Stay Accommodative. And by default, real returns will continue to decline, “they explain.

For his part, David Page, Head of Macro Research at AXA Investment Managers, also suggests that “monetary policy will have to remain supportive for a shorter period. Both events suggest an increase in market interest rates. The general market reaction is less certain. The prospect of greater fiscal policy and less monetary stimulus should support the US dollar. The dollar has fallen 5% since the November election against a basket of currencies and we would expect some of that loss to unravel. However, the immediate market reaction has seen further weakness of the dollar.

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