A house divided: US election fallout weighs heavily on long-term outlook

Failure of 'Blue Wave' a blow to stimulus package

The prospect of a split US government buoyed equity markets heading into the end of US election week with investors encouraged by the softening risk of higher taxation under a Joe Biden Presidency, but concerns of an obstructed political process weigh on prospects for growth over the next four years.

Global equity markets rallied from the day of the US elections (3 November) through to the end of the week as the likely result became clearer, with the S&P 100, S&P 500 and MSCI World up 4.4%, 3.6% and 3.7% respectively, according to FE fundinfo data. Healthcare and technology led the gains as the Democratic Party's failure to achieve the much discussed 'Blue Wave' calmed concerns over impending reform and regulatory pressure, while materials, financials and industrials weakened. US Election 2020: What's in store for investors? The Democrats' failure to increase their House of Rep...