Biden Still Leading, U.S. Dominated by Positive Democrat Sentiment, Biden’s Impact on Stock Sectors

Joaquin Monfort | August 25, 2020

In our latest election monitor update Biden increases his lead still further, the U.S. map turns blue as Democrat sentiment dominates, and an analysis of how sensitive stock sectors have been impacted by changing election expectations.

In this update, Biden’s probability of winning has hit new highs, news sentiment turns Democrat blue, and we analyse how certain stocks are being impacted by Biden’s increased chances of winning.

  • Biden still enjoys a more than 95% chance of winning
  • News sentiment now positively Democrat across the U.S.
  • Is there a link between Biden’s chances of winning and returns in sensitive sectors like sustainable energy and construction?

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BIDEN SOLIDIFIES LEAD

Biden seems to have gained a further boost both from his choice of running mate in Kamala Harris and his speech at the Democrat convention which appears to have allayed concerns about his presentation skills.

This is reflected by our monitor, which is showing that Biden is still seen as more than 95% likely to win.

How would the votes fall? According to our monitor, if an election were held tomorrow Biden would most likely win by a majority of 78 electoral votes, or 308 to 230.

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These are optimum figures, within ranges of between 281 - 353 electoral votes for Biden and 185 - 257 for Trump.

Biden dominates news sentiment and Wyoming is the only state where Trump enjoys better News Sentiment than Biden - the rest of the country is now coloured blue.

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Another standout change highlighted by the monitor is that Trump’s projections have shot up in Georgia, where he is now estimated as 81.2% likely to win.

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As far as Polls go, Biden is pretty much maintaining his almost 9-point lead over Trump.

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It’s widely known that Biden is a fan of sustainable energy, something which is expected to support green-energy stocks.

Recently our data science team compared Biden’s chances of winning to the performance of a global clean-energy ETF to see whether there had been a positive impact on stock prices as a result of his improved chances of winning. The results seem to show a link.

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CONSTRUCTION EXPECTED TO GAIN

Another sector expected to see gains in the event of a Biden win is Construction because of the Democrat nominee’s ambitious infrastructure building plans.

A stock which seems to get a lot of mentions in relation to a Biden win is Granite Construction Incorporated (GVA).

Like the green-energy example above, does GVA also show a sensitivity to Biden’s shifting electoral fortunes? It would seem logical to expect the price to reflect Biden’s chances of winning, at least to some degree.

The pie chart below shows the results of a study which compared daily changes in both series from March 01 of this year to August 21.

Stock price and projections went in the same direction on 65 days whilst on 57 days they went in opposite directions. It seems to suggest the possibility of some correlation but nothing statistically significant.

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Below is a comparison of the stock price and the projections over time.

It shows that although the two initially went in opposite directions, with GVA’s stock price actually falling even though Biden’s chances of winning began to dramatically improve, they more closely aligned over time. This seems reasonable given the increasing impact of the election as we get closer to the November 3 deadline, and the limited impact it had back in March, when all the headlines were about Covid-19.

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