Election Worries Sidestepped as Markets Bank on Fed’s Economic Lifeline, Green Says
Concerns over the U.S. presidential election are being overshadowed by optimism about a likely interest rate cut from the Federal Reserve, according to Nigel Green, CEO of Devere Group, a prominent financial advisory and asset management firm.
As voters head to the polls, Green highlighted on Tuesday that market sentiment is largely focused on the Federal Reserve’s two-day meeting this week, where officials are expected to announce a rate reduction to support the economy. Major markets reflected this sentiment, with the pan-European Stoxx 600 seeing gains, U.S. stock futures staying steady, and mixed trading in the Asia-Pacific region. Green pointed out:
While the presidential election between Kamala Harris and Donald Trump is poised to have significant consequences, particularly if political gridlock ensues, markets are currently focusing on the more immediate boost expected from the Fed’s actions to support economic growth.
The Fed is widely expected to lower its interest rate by a quarter percentage point, which would decrease borrowing costs for businesses and consumers and potentially encourage spending and investment. Green said this move “could provide the momentum needed to keep the economy on track, despite the looming election risks.”
He added: “Global investors appear to be weighing the central bank’s supportive stance more heavily than fears of a deadlocked Congress, with European stocks seeing modest gains and U.S. futures holding steady.” While the Devere executive acknowledged that “the U.S. election is undeniably a critical event,” he believes “the potential for economic stimulus through lower borrowing costs is winning the attention of investors.” A divided government or a contested election outcome “could lead to delayed policy decisions or even political stalemates, but for now, the focus remains on the Fed’s likely intervention to shield the economy from further weakening,” he warned.
Green further emphasized that investors are prioritizing the Fed’s policies for their immediate effect, especially compared to the possible long-term impacts of election-driven legislative changes. He described:
Investors are betting that the Fed’s actions will have a more direct and swift impact on the economy compared to the potential long-term effects of the election, where legislative changes could take months to unfold.
Lower interest rates in the U.S. are likely to influence international markets closely tied to American economic trends, Green noted, concluding: “For investors, the Fed’s immediate actions are seen as the greater market-moving force for now.”
Source:news.bitcoin.com
