Updated: Nov 19, 2020
A victory for Democrat Joe Biden in the U.S. presidential election will likely ease some jitters in financial markets this week even as President Donald Trump refuses to concede and presses ahead with legal fights against the outcome. But with control of the Senate still up in the air and the fresh resurgence in virus cases market risks linger and the prospect of additional economic stimulus before January is unlikely. Investors will be watching appearances by several Federal Reserve officials, including Chairman Jerome Powell later in the week. Meanwhile, earnings season is beginning to wind down, but there are still dozens of companies set to report and Brexit talks are heading into extra time. Here is what you need to know to start your week.
Biden wins U.S. presidency
Major networks declared Democrat Joe Biden the winner of the U.S. presidential election on Saturday and although current President Donald Trump said he would fight the results in court his chances of overturning the election results are slim.
U.S. stock markets registered their biggest weekly gains since April last week, on bets Biden would win and Republicans would hold onto the Senate. That scenario would create a steadier hand in the Oval Office and a Congress that would keep Biden from implementing tax increases or many new regulations.
As such, investors focus will now turn to two Senate races in Georgia heading to run-off elections in early January.
The significance of those races, which could potentially end up with the Democrats controlling the White House, Senate and House of Representatives, means January is "the new November" in terms of election volatility risk, Michael Purves, founder and CEO of Tallbacken Capital, said in a note to clients.
The U.S. on Saturday reported a record increase in coronavirus cases for a fourth consecutive day with at least 131,420 new infections, bringing the country's total caseload to about 9.91 million, according to a Reuters tally. The number of deaths nationwide was more than 1,000 for a fifth consecutive day on Saturday, according to Reuters.
But despite the resurgence in virus cases the prospects for a major fiscal-stimulus package before January remain dim.
Democrats potentially have an incentive to wait until after the runoff races in Georgia in January when they could retake control of the Senate. That would allow them to push through their own large spending package.
For their part, Senate Republicans will be able to block large scale spending called for by Democrats. On Friday, U.S. Senate Majority Leader Mitch McConnell said that economic data, including a decline in the unemployment rate, showed that Congress should enact a smaller stimulus package.
Wall Street welcomes Biden victory
Investors and prominent Wall Street figures said Saturday they were happy with the election finally being called, ending days of uncertainty during which Trump made repeated claims of electoral fraud without providing evidence.
"Now is a time for unity," JPMorgan Chief Executive Jamie Dimon said in a statement. "We must respect the results of the U.S. presidential election and, as we have with every election, honor the decision of the voters and support a peaceful transition of power."
Billionaire investor Bill Ackman wrote on Twitter: "There comes a time in the battle when one should fold the tent," and urged: "Concede graciously and call for unity."
"Biden is good news for the markets," Christopher Stanton, chief investment officer at Sunrise Capital Partners, said on Saturday. "We're all so tired of the whipsaw that came with the Trump tweets."
In earnings news, some of the companies reporting in the coming days include McDonald’s (NYSE:MCD), Softbank (T:9984), Beyond Meat (NASDAQ:BYND) and Tilray (NASDAQ:TLRY) on Monday and Walt Disney (NYSE:DIS), Applied Materials (NASDAQ:AMAT) and Cisco (NASDAQ:CSCO) on Thursday.
Fed speakers, inflation data
The U.S. economic calendar features updates on inflation and consumer confidence along with Thursday’s report on initial jobless claims.
Friday’s jobs report showed that the U.S. economy created the fewest jobs in five months in October and more Americans are working part time, the clearest indication yet that the recovery from the pandemic induced recession is losing momentum as fiscal stimulus dries up and new virus cases mushroom.
Several Fed speakers are due to make appearances this week including Cleveland Fed President Loretta Mester, Dallas Fed President Robert Kaplan, Chicago Fed President Charles Evans, New York Fed President John Williams, Fed Vice Chairman Randal Quarles and Fed Governor Lael Brainard.
Fed Chairman Jerome Powell is due to speak as part of a panel at the annual ECB forum on central banking on Thursday.
Britain and the European Union have until Nov. 15 to try, once again, reach an agreement on a Brexit trade deal. Similar deadlines have come and gone before but this one is important because the transition period -- under which Britain has remained in the EU customs union and single market -- ends on Dec. 31.
Both sides say a deal can be reached, but the EU's chief negotiator has warned of "very serious divergences."
It underlines the uncertainty the UK economy is facing after the Bank of England announced a larger-than-expected stimulus increase just last week to cushion the economy from the ravages of new coronavirus lockdowns and Brexit.