How investors view the Georgia U.S. Senate runoff

{Joe Biden}: “Well, guess what? Now you're going to have to do it again. Come January 5th, you got to vote in record numbers again.”

The U.S. is facing another major election,

this time over control of the Senate.

Investors are watching the Georgia Senate runoffs closely.

It’s been a major political unknown since the November Presidential election and could ripple through asset prices.

Various analysts say that a flip to Democrat control could put more pressure on the dollar and spark Treasury debt yields higher,

while Republicans keeping control could fuel equities.

What's at stake?

There are two Senate seats up for grabs, both in the southern state of Georgia.

Incumbent Republican senators David Perdue and Kelly Loeffler are facing off Democratic challengers Jon Ossoff and Raphael Warnock.

Republicans need to win one seat to maintain a slim majority.

If Democrats sweep the twin runoffs, the chamber would be split 50-50.

The tie-breaking vote would go to Vice President-elect Kamala Harris, giving President-elect Joe Biden’s party full sway over Congress.

A unified government would present Biden with enhanced ability to reshape the world’s largest economy, from rewriting the tax code to boosting stimulus and infrastructure spending.

So how are the election outcomes likely to affect markets?

Some analysts say Republicans winning both seats would be positive for stocks and limit the need for investors to tweak portfolios.

Any policy changes the Biden administration tries to bring would have to garner bipartisan support and necessarily be more moderate.

For the battered U.S. dollar, it could mean less government spending and less risk of tax hikes.

Democrats nabbing both seats has the most potential for market upheaval – according to analysts.

Biden has in the past proposed raising corporate tax – this is viewed as negative for stock prices.

But no matter the outcome, for investors there should be at least some relief

at long-awaited clarity over the balance of power in Congress.

Video Transcript

JOE BIDEN: Well, guess what? Now you're going to have to do it again. Come January 5, you got to vote in record numbers again.

- The US is facing another major election, this time over control of the Senate. Investors are watching the Georgia Senate runoffs closely. It's been a major political unknown since the November presidential election and could ripple through asset prices. Various analysts say that a flip to Democrat control could put more pressure on the dollar and spark Treasury debt yields higher, while Republicans keeping control could fuel equities.

What's at stake? There are two Senate seats up for grabs, both in the southern state of Georgia. Incumbent Republican senators David Perdue and Kelly Loeffler are facing off Democratic challengers John Ossoff and Raphael Warnock. Republicans need to win one seat to maintain a slim majority. If Democrats sweep the twin runoffs, the chamber would be split 50-50.

The tie-breaking vote would go to Vice President-elect Kamala Harris, giving President-elect Joe Biden's party full sway over Congress. A unified government would represent Biden with enhanced ability to reshape the world's largest economy, from rewriting the tax code to boosting stimulus and infrastructure spending.

So how are the election outcomes likely to affect markets? Some analysts say Republicans winning both seats would be positive for stocks and limit the need for investors to tweak portfolios. Any policy changes the Biden administration tries to bring would have to garner bipartisan support and necessarily be more moderate. For the battered US dollar, it can mean less government spending and less risk of tax hikes.

Democrats nabbing both seats has the most potential for market upheaval according to analysts. Biden has in the past proposed raising corporate tax. This is viewed as negative for stock prices. But no matter the outcome, for investors, there should be at least some relief at long-awaited clarity over the balance of power in Congress.