Europe’s politicians are panicking about US tech again. The S&P 500 (+7.8%) has outperformed the Euro STOXX 600 (-11.6%) by a huge margin so far this year. Information technology shares have risen 32.2% in the US, year-to-date.
The economic data in the US has been encouraging too. The Philly Fed manufacturing survey, the NFIB survey and retail sales were all strong last week. The industrial production numbers were disappointing, but output for high-tech industries climbed to a new high.
Mr Trump is sufficiently far behind to raise the spectre of the Democrats taking control of Congress as well as the White House. For the stock market, a thumping win by Joe Biden would be a double-edged sword. There will be more fiscal stimulus, but individual states could come under pressure to implement tougher restrictions should infection rates continue to climb. The Democrats will also be under pressure from the party’s activists to break-up Alphabet, Amazon, Apple, Facebook and Microsoft. Breaking up the big five could hamper the US in its ability to compete with Chinese ‘big tech’.
But the Biden presidency will present opportunities, with a welcome, overdue focus on green technology.
Summary
• Democrats will be good for green tech and the environment
• But targeting big tech may not be helpful
• Biden would be a double-edged sword for markets
