[Good Morning Stock Market] "Despite Biden's Election, Commodity Influence Expected to Be More Limited Than Anticipated"

On the 8th, citizens at the Seoul Station waiting room are watching news related to Democratic Party candidate Joe Biden, who won the 46th U.S. presidential election. Photo by Moon Honam munonam@

[Asia Economy Reporter Kum Boryeong] The election of Democratic candidate Joe Biden as the President of the United States, which attracted global attention, has been confirmed. Regarding this, the impact on the commodity market is expected to be more limited than previously anticipated. Additionally, with the 'Blue Wave' not yet dashed, the Democratic Party is expected to push forward uncertain large-scale stimulus measures.

◆ Kim Soyeon, Researcher at Daishin Securities = The impact of President Biden's election on the commodity market is judged to be more limited than previously expected. This is because the Democratic Party's failure to regain control of the Senate creates an environment where Biden's pledges are difficult to fully implement. Progress on Biden's $2 trillion renewable energy infrastructure investment plan and revisions to biofuel-related policies appear more challenging than anticipated.

Therefore, if Biden is elected, the price increases of non-ferrous metals and agricultural products, which were expected to benefit, are likely to be limited. The growth potential of the renewable energy market remains valid. However, if approval for the previously planned large-scale renewable energy infrastructure investment is delayed, expectations for expanding new demand for non-ferrous metals will decrease. Also, if there are no changes to biofuel policies, the increase in biofuel demand for corn and soybeans will inevitably be limited.

However, the existing view that downward pressure on international oil prices will increase remains unchanged. Biden is highly likely to increase Middle East oil supply through a softened Middle East policy toward countries like Iran and Venezuela. Without congressional approval, Biden can rejoin the Iran nuclear deal, which President Trump withdrew from. If sanctions are eased and oil production in Iran and Venezuela resumes, oil supply could increase by more than 1.2 million barrels per day in the short term. On the other hand, if the implementation of Biden's pledges is delayed and the substitution of demand toward renewable energy is postponed, the recovery speed of oil demand could relatively accelerate.

◆ Lee Sangjae, Researcher at Eugene Investment & Securities = Between a certain small-scale stimulus and an uncertain large-scale stimulus, we place more weight on the latter. The majority party in the U.S. Senate has not yet been decided following the November 3 election. In the current Senate seat distribution, Republicans hold 50 seats and Democrats 48 seats, with two runoff elections likely in Georgia to decide both seats. In this case, the majority party in the Senate will be determined on January 5 next year, after the Georgia runoff elections.

The Democratic and Republican parties remain at an impasse over the size of an additional economic stimulus package. The Republicans advocate for a small-scale package of around $500 billion, while the Democrats insist on the necessity of a large-scale stimulus package worth $2.2 trillion. Based on past cases, it is difficult to expect an agreement between the two parties.

The Democrats have two options. One is to accept the Republican proposal and agree on a small-scale stimulus package within the year, and the other is to postpone negotiations with the Republicans until after the Georgia runoff elections in early January. If the Democrats win both runoff seats, they will achieve a 'Blue Wave' by controlling the White House and both chambers of Congress.

We place more weight on the latter possibility. Since Biden was elected in the U.S. presidential election, the Democrats are in no rush. The strong U.S. employment data in October paradoxically increases the Democrats' negotiating leverage. Even if an early agreement is not reached, the possibility of an immediate collapse in consumer spending has decreased.

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