Tags: Romney | stocks | Obama | bonds

Analysts: Stocks Would Rally with Romney Victory

Monday, 05 Nov 2012 09:18 AM

Expect stocks to rally if GOP hopeful Mitt Romney triumphs over President Barack Obama in Tuesday’s presidential elections, analysts say.

A Romney victory would fuel market expectations for broader tax cuts and a dismantling of regulations such as the Dodd-Frank financial reform law and the Affordable Care Act, known widely as Obamacare.

“Recent surveys suggest institutional investors believe that an Obama win would favor bonds, a Romney win, stocks,” Peter Buchanan, senior economist at CIBC World Markets, wrote in a note, according to MarketWatch.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Some sectors that would benefit from an Obama victory, such as alternative energy, healthcare and real estate, have trailed those sectors that would rally with a Romney victory, namely conventional energy, financials, defense and telecom, according to Buchanan.

“If you get a Romney win, it could be better for the market in the short-term, knee-jerk reaction, since it could be taken as being a more business and investment-friendly administration,” said Brian Lazorishak, a senior vice president of Chase Investment Counsel, according to CNNMoney.

“While the market might sell off on an Obama win, it’s hard to see how long that would last.”

Analysts at Barclays have forecast that an Obama victory would send safe-haven bond prices rising, with the yield on the 10-year U.S. Treasury falling to 1.5 percent from 1.7 percent now, MarketWatch added.

Yields move in reverse from bond prices.

Some overseas investors, however, tend to view an Obama victory as better for markets, as a change of leadership would fuel policy uncertainty.

“[Romney’s] election could lead to more political and economic uncertainties over the longer term as he would implement an ambitious tax reform, huge spending cuts [and] a tax plan favorable to the highest income based on a too-optimistic growth scenario that would produce uncertain effects on growth,” analysts at Franco-Belgian Dexia Asset Management said recently, according to Reuters.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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