These sectors may receive bull news after the US Midterm Elections
As voters cast their ballots in the midterm elections, which are anticipated to terminate Democrats' dominance of the legislative branch and usher in a period of gridlock, Morgan Stanley and JPMorgan Chase & Co. are taking optimistic positions on stocks.
Divided governments are more likely to maintain the status quo, which lessens uncertainty, because they find it difficult to agree on new legislation. This could result in lower bond yields and higher equity prices, according to Morgan Stanley's Michael Wilson.
If Republicans take control of both chambers of Congress, GOP lawmakers would find it easier to advance their policy agendas, which support energy, defense, pharmaceutical, and biotech firms, though President Joe Biden might exercise his veto authority.
Furthermore, according to Morgan Stanley, a "clean sweep" by the Republicans could significantly raise the likelihood that fiscal expenditure would be halted and historically high budget deficits will be lowered, which would fuel a rally in 10-year Treasuries and boost the stock market.
Following the results of the midterm elections, equities investors should keep an eye on these areas:
The US legalization process has moved slowly, which has had a negative impact on the highly speculative cannabis market. The Cannabis Index has fallen 57% in 2022, with at least a 46% decline in each of $Tilray Brands (TLRY.US)$ , $Canopy Growth (CGC.US)$ , and $SNDL Inc (SNDL.US)$
Investors will be closely observing a number of state referendums for advancements toward local legalization.
Federal legalization would likely be taken off the table for the time being if Republicans were to dominate at least one chamber of Congress. Although doubtful, having Democrats in charge of both chambers would be far better for the cannabis sector. When Biden pardoned all prior federal charges for simple possession of marijuana, the Cannabis Index spiked 18% last month.
Democrats are promoting Inflation Reduction Act provisions that would allow Medicare to bargain for some prescription prices as a historic change that would bring down American medicine prices.
Rick Weissenstein, a Cowen analyst, said that "Republicans have typically been more supportive of the drug sector than Democrats."
Any modifications to the laws governing medication pricing might have an influence on the revenue projections of pharmaceutical firms including $Pfizer (PFE.US)$ , $AbbVie (ABBV.US)$ , $Eli Lilly and Co (LLY.US)$ , and $Merck & Co (MRK.US)$
Both Democrats and Republicans support the threat to delist Chinese equities that are traded on US exchanges.
According to Jaret Seiberg, an analyst at Cowen & Co., if Republicans gain total control of Congress, the level of supervision will increase and there will probably be hearings not only about the state of audits but also over whether Chinese companies should even be listed in the US.
A significant climate measure just passed by Democrats involves hefty, long-term incentives for clean-power installations. It's quite unlikely that these credits would be in jeopardy after the November elections, despite the fact that no Republicans in Congress backed the law.
This is encouraging for the rooftop solar installer $Sunrun (RUN.US)$ and the developer $NextEra Energy (NEE.US)$. There are still two more years left in Biden's term, and the climate change bill is a major accomplishment that he will be eager to defend.
With the price of oil and natural gas rising, energy stocks have been a rare bright light in an otherwise dismal year for the stock market. Americans now pay more for petrol as a result, making the sector a simple target for Democrats during an election campaign that is centered on the costs of inflation.
Energy policy is unlikely to undergo a significant change, even if Republicans take over the Senate or the House. Although the recent threat by the Biden administration to impose a windfall tax on oil producers initially caused shares of $Phillips 66 (PSX.US)$ , $Exxon Mobil (XOM.US)$ , and $Chevron (CVX.US)$ Corporation to decline, such a plan is probably going to be defeated by Republican lawmakers.
A last-ditch effort to pass a pair of delayed laws through Congress before a projected Republican takeover in January, the White House is indeed contemplating a post-midterm push for antitrust legislation. If the GOP regains control of either chamber of Congress, they have made it clear that they will not support the measures.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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