D.he dramatic events around the Capitol in Washington on Wednesday did not leave a big mark, at least on the stock exchanges. On the contrary, from an investor’s point of view, the fact that future President Joe Biden can rule with a clearer majority prevailed. This also fueled the upward trend of the German leading index Dax, which reached a new record high of 14,000 points.
At the close of trading, the Dax was at 13,968 points, a daily gain of 0.6 percent and the highest value based on the closing price. Bitcoin also continued to soar, rising to more than $ 39,000. Just a week ago, the digital currency jumped over $ 20,000.
In the midst of the chaos wrought by supporters of the incumbent President Donald Trump, it almost went under that the Democrats won the runoff elections for the Senate post in Georgia. They now control both chambers in Congress with 50 seats and Kamala Harris as Vice President and tipped the scales. Even if there is now talk of a “blue wave”, the implementation of many laws still requires a majority of 60 votes in the Senate. So it won’t be that easy for Biden.
Market expects new economic aid
For many stock market traders, the result is especially important with regard to the effects on fiscal policy and corporate taxes. The market now expects new economic aid to flow soon. Goldman Sachs analysts are assuming a package worth $ 600 billion. Cyclical stocks in particular should benefit from this. The American standard stock index Dow Jones, in which companies from the industrial sector are strongly represented, rose by more than 2 percent on Wednesday, as did the MSCI USA Infrastructure Index. At the start of trading on Thursday, the Dow Jones opened up 0.9 percent.
Paradoxically, the good news for the American economy is bad for the relative performance of American stocks, commented Paul O’Connor of Janus Henderson Investors on the impact of the runoff on the markets. He sees the reason for this being the prospect of higher corporate taxes, higher bond yields and concerns about regulatory interference. From his point of view, these weigh heaviest on the media, technology and communication giants. In other words, exactly the companies and industries that have dominated the American indices in recent years and pulled them up. However, it is still unclear whether the effect of a more expansive fiscal policy, which pleases the stock markets, or higher corporate taxes, which they dislike, is still unclear, believes Matthias Hoppe from asset manager Franklin Templeton.
Tech giants lose, arms manufacturers win
The technology-heavy Nasdaq 100 temporarily lost more than 1.4 percent on Wednesday. The titles of the tech giants from Apple, Facebook and Amzon.com to Microsoft gave way as a direct reaction to more than 2.5 percent. At the start of trading on Thursday, the Nasdaq was able to almost make up for these losses.
The prices of American handgun sellers also reacted to the Senate election in Georgia. The shares of one of the largest gun manufacturers in North America, Smith & Wesson, rose more than 18 percent. The titles from Sturm Ruger & Co. gained more than 12 percent on Wednesday in direct response to the results. On Thursday, however, the stocks gave up some of their gains. Market participants are speculating that many Americans will soon stock up on weapons on a larger scale. Under a Democratic President Biden, it is expected that gun laws in America could tighten.