[Good Morning Stock Market] US Stocks Rise on Biden Victory and Emergency Fund Injection

US Congress to Allocate $8.3 Billion to Curb COVID-19 Spread
Moderate Biden Wins 'Super Tuesday'... Positive for Markets

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The U.S. economy and stock market are expanding their gains. Although growth was stalled due to the spread of the novel coronavirus infection (COVID-19), the U.S. Congress announced emergency funding for it, and the moderate former Vice President Joe Biden's continued victories in the Democratic presidential primary have been analyzed as positive factors.

◆ Sangyoung Seo, Kiwoom Securities Researcher = The U.S. stock market started higher, supported by favorable economic indicators and news from the Democratic presidential primary. Although some gains were given back when the number of COVID-19 cases in the U.S. temporarily increased, the market extended its gains again after Congress announced an $8.3 billion (approximately 9.8 trillion KRW) emergency funding package.

The number of confirmed COVID-19 cases in the U.S. rose by about 30 to 138 compared to the previous day, and Los Angeles (LA) declared a state of emergency, spreading concerns. However, these concerns eased with news that the U.S. Congress would vote on emergency funding. Additionally, as confirmed cases surged in Europe, including Italy, the International Monetary Fund (IMF) claimed that global growth rates would be lower than last year and announced a $50 billion support plan, indicating that funding from various countries and major institutions is expanding, which is also positive. Furthermore, the U.S. economic indicators released that day were solid, and the Federal Reserve (Fed) mentioned in its Beige Book that the U.S. economy is growing moderately, which is also favorable.

Former Vice President Biden's advance is also a positive factor. Technology and healthcare sectors surged, leading the rise in the U.S. stock market. Through this 'Super Tuesday,' Biden secured 566 delegates, surpassing Senator Bernie Sanders' 501 delegates. Moderate candidates such as former South Bend, Indiana Mayor Pete Buttigieg and former New York Mayor Michael Bloomberg withdrew and declared support for Biden, causing Biden's nomination probability to jump 59% from a week ago to 80%. In contrast, Senator Sanders' support dropped 36% to 12%. Senator Sanders has advocated for raising the corporate tax rate (from 21% to 35%), expanding healthcare, and strengthening regulations on information technology (IT) companies.

◆ Yeonju Jo, NH Investment & Securities Researcher = In the 14 state primaries held on the 3rd (local time), former Vice President Biden took the lead by winning in 10 states. Senator Sanders won in California, which has the largest number of delegates. This is not an overwhelming victory compared to the 2016 Super Tuesday (Hillary Clinton 511 vs. Sanders 348). If the third-place Senator Elizabeth Warren's supporters shift to Sanders, the outcome is uncertain.

However, it is significant that major candidates such as Senator Amy Klobuchar, former Mayor Buttigieg, and former Mayor Bloomberg withdrew and officially endorsed former Vice President Biden. Biden's position is strengthening within the Democratic Party's anti-Sanders faction after his defeat in the presidential polls. It is also positive that since 1990, candidates who have won the Super Tuesday primaries have had a 100% success rate in winning the Democratic National Convention.

Therefore, the results of this Super Tuesday primary are favorable for the stock market. Not only did former Vice President Biden win, but it also confirmed the large size of the anti-Sanders faction within the Democratic Party. Biden's policies reflect the tendencies of moderate Democrats, so their impact on the stock market is unlikely to be extreme. The corporate tax rate is planned to be raised from 21% to 28%, and the capital gains tax from 20% to 28%, aiming to raise $3.2 trillion in taxes over the next 10 years to address healthcare and climate change. Healthcare and green energy stocks are expected to benefit instead.

This content was produced with the assistance of AI translation services.