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Markets set for rally after U.S. elections, Barclays says

Markets Set for Rally After U.S. Elections, Barclays Says

Overview

Analysts at Barclays believe that the U.S. stock market is poised for a rally after the upcoming presidential election. In a recent note to clients, the bank said that it expects the S&P 500 index to rise by 10% over the next 12 months as investors bet on a return to normalcy and gridlock in Washington.

Reasons for Optimism

Barclays cites several reasons for its optimism about the stock market. First, the bank believes that the market is currently undervaluing the potential for a strong economic recovery. The bank's economists expect GDP to grow by 4% in 2021 and 3% in 2022, which would be the fastest pace of growth since the late 1990s.

Second, Barclays believes that the upcoming election will result in a divided government, with Republicans controlling the Senate and Democrats controlling the House. This would create gridlock in Washington, which would make it difficult to pass major legislation.

Impact of Election Outcome

The outcome of the election will have a significant impact on the stock market. If Biden wins, the market is likely to rally on the expectation of a more stable and predictable policy environment. If Trump wins, the market is likely to sell off on fears of continued uncertainty and volatility.

Conclusion

Overall, Barclays is bullish on the U.S. stock market over the next 12 months. The bank believes that the market is currently undervalued and that the upcoming election will result in a divided government, which would create gridlock in Washington. This would create a favorable environment for stocks.