U.S. presidential election Market officials are wary of risk that results will not be decided immediately

U.S. presidential election Market officials are wary of risk that results will not be decided immediately November 4, 4:14

With the US presidential election coming up, attention is focused not only on the outcome of the financial markets, but also on when the results will be known.

Market officials are wary of the risk that the president will not be decided immediately, as there are concerns about delays in ballot counting due to the large increase in postal voting.

In Japan's financial markets these days, in addition to the large-scale fiscal mobilization of governments and funding from central banks following the spread of the new coronavirus, many investors want to determine the outcome of the US presidential election, and stock prices.・ Both the yen market have continued to move relatively firmly.

On the 2nd before the holiday, the Nikkei Stock Average closed at the closing price and recovered to the 23,000 yen level for the first time in 2 business days, closing the transaction.

With the US presidential election coming up, the market is expected to aggressively mobilize to support the US economy affected by the new corona virus, regardless of whether President Trump or Democrat Biden wins. There is a view that it works positively for the United States.

In addition, as a result of the Senate and House of Representatives elections held together, it is expected that if the "twist" in which the majority is different is resolved, it will lead to the stability of American politics.

On the other hand, what market players are concerned about is the risk that the president will not be decided immediately.

In this presidential election, it has been pointed out that the counting of votes may be delayed due to a large increase in postal voting as the infection of the new coronavirus spreads.

In addition, President Trump has repeatedly criticized the postal ballot as "fraudulent," and many investors are concerned about the confusion over ballot counting.

Some say that if they get involved in a court battle, it is possible that stock prices will fall and the yen will appreciate.

For this reason, market participants are paying attention not only to the outcome of the victory or defeat, but also to when the outcome of the presidential election will be known.

The impact on the Japanese economy

How will the outcome of the US presidential election affect the Japanese economy?

There are many views among Japanese economists that whether President Trump or Mr. Biden wins will take stimulus measures for the time being, but there are concerns about intensifying confrontation with China.

In terms of specific policies, President Trump has implemented historic tax cuts, such as a significant reduction in the corporate tax rate, in the first term, but plans to make additional tax cuts.

On the other hand, Mr. Biden has appealed to companies and the wealthy for the need for a tax increase, while he says that he will make large-scale fiscal mobilization mainly in the environmental field.

In the current situation where the effects of the new coronavirus continue, both candidates are expected to prioritize aggressive fiscal stimulus, and monetary policy is expected to continue with large-scale easing measures.

The growth rate of GDP = gross domestic product from July to September in the United States improved significantly to + 33.1% on an annualized basis, partly due to the reaction to the period before the record decline.

In response to the recovery trend of the US economy, Japan's September trade statistics showed that exports to the US exceeded the same month of the previous year for the first time in a year and two months.

In particular, demand for automobiles recovered, and automobile production in Japan also increased significantly in September.

The economic situation of the United States, the second largest trading partner, is extremely important for the Japanese economy to get on a stronger recovery track.

On the other hand, one concern is the impact of the intensifying conflict between the United States and China on the world economy.

There are many views that the hard-line stance toward China will not change regardless of whether President Trump or Mr. Biden wins.

If the world economy stagnates due to the intensifying conflict between the United States and China, it will inevitably have an adverse effect on Japan.

Another concern is the US financial problem, which was exacerbated by the huge economic measures following the spread of the new coronavirus infection.

In the US fiscal year ending September, the budget deficit has more than tripled from the previous year to $ 3.132 trillion, the worst level ever.

Regardless of which candidate is elected, it is unlikely that fiscal consolidation will make significant progress for the time being, and it is likely to pose a risk to the world economy as public debt grows in each country.

Trade / environmental policy

In the US presidential election, the conflict between the US and China is expected to continue regardless of which candidate wins, but if Mr. Biden wins, the environmental policy will further advance the EV shift from gasoline cars to electric cars. It is likely to change significantly, and it is expected that Japanese automobile manufacturers will be forced to respond.

President Trump has set the principle of America first, and in addition to withdrawing from the TPP = Trans-Pacific Partnership Agreement in order to protect domestic employment, there was also a phase in which Japan was severely urged to reduce tariffs on agricultural products.

Furthermore, it has maintained a strong stance against China as a security threat.

The start of regulations to stop the supply of semiconductors to Huawei, a major telecommunications equipment company, has also affected Japanese companies with which we do business.

On the other hand, Mr. Biden has taken a critical position on President Trump's method of imposing high tariffs on other countries, and some say that such a policy may be reviewed if the Biden administration is adopted.

However, Mr. Biden also said that he would counter China's unfair trade practices, and it seems that the conflict between the two major economies of the world, the United States and China, will continue regardless of which candidate wins, and the Japanese government will take a difficult response. You will be forced to.

On the other hand, environmental policy could change significantly if Mr. Biden wins.

Mr. Biden is active in environmental issues and has indicated that he will return to the Paris Agreement, an international framework for global warming countermeasures that President Trump has announced withdrawal.

In addition, the automobile industry has set out a policy to support the production and purchase of electric vehicles by installing 500,000 charging stations, and if the shift to EV = electric vehicles further progresses, Japanese manufacturers will be able to develop technology. It is expected that we will be forced to take measures such as accelerating development.