JPMorgan says US election odds are narrowing, making a contested result that could hamper stimulus and hurt stocks more likely | Markets – Business Insider

JPMorgan says US election odds are narrowing, making a contested result that could hamper stimulus and hurt stocks more likely | Markets – Business Insider


Trump Biden Debate
U.S. President Donald Trump and former Vice President and Democratic presidential nominee Joe Biden speak during the first presidential debate at the Health Education Campus of Case Western Reserve University on September 29, 2020 in Cleveland, Ohio.

  • Democratic presidential nominee Joe Biden’s shrinking lead in betting markets suggests a contested election is becoming more likely, JPMorgan strategists said Tuesday.
  • A higher chance of a contested or close election outcome would slam the bank’s expectations for fresh stimulus and “likely put some downward pressure on risk markets for the near term,” the team wrote in a note to clients.
  • A close result could also yield a split Congress and prolong the months-long stimulus stalemate. 
  • Long-term strategies should allocate 40% of their portfolios to stocks, the team added, as upside for equities depends on central bank asset purchases.
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Markets might be too quick to price in a Biden presidency, JPMorgan strategists said Tuesday.

Democratic presidential nominee Joe Biden maintained a steady lead in the polls in recent weeks, leading many firms to adjust expectations for 2021 stimulus, tax policy, and Congressional makeup. Yet betting markets are now reversing course and point to a narrowing lead for the former vice president. The shrinking gap suggests the odds of a contested election are increasing, as President Donald Trump has already indicated he may avoid conceding
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