Victory for the Democrats could hold back US equities

The odds that Joe Biden wins this year’s US presidential election, and that the Democrats also win full control of Congress, have risen recently. While we expect US equities to fare reasonably well over the next few years regardless of the result of the elections, we think that a ‘clean sweep’ for the Democrats would hold back the US stock market. That is chiefly because such an outcome would probably mean higher corporate taxes, but there are also some notable risks in a few other policy areas.