Most U.S. equity investors now expect presumptive Democratic nominee Joe Biden to defeat President Donald Trump in the November election, according to a new survey from RBC, an event that will also be bearish for stocks given the former Vice President’s policy stances.
According to the survey of 107 institutional investors, 63% of investors expect Biden and the Democrats to win in November. The data represent a sharp reversal from Wall Street’s sentiment before the COVID-19 pandemic, which showed markets consistently pricing in Trump’s reelection.
Along those lines, investors anticipating the president’s victory fell substantially for the second consecutive survey, RBC noted. Presently, only 37% see a Trump re-election — down more than half from the 76% who said he’d prevail in the bank’s December survey, and down from 52% in March.
However, most investors still view Trump's re-election as bullish or very bullish for stocks, while only 5% see it as bearish for stocks. A majority of investors view a Biden victory as bearish or very bearish given his progressive views on taxation and wealth, while only 7% think it's bullish for stocks.
"Our survey picked up an important shift in how U.S. equity investors are thinking about a Biden victory. Biden bears surged in our June poll, rising for the second survey in a row. 60% now see Biden as a bearish or very bearish outcome for the stock market, up from 24% in our December 2019 poll," RBC's head of U.S. equity strategy Lori Calvasina wrote in the note.
Trump’s poll numbers have been reeling from the twin blasts of social unrest and a coronavirus crisis that has yet to be brought under control. With asset prices also in turmoil, some on Wall Street are bracing for a Democratic sweep of the White House and Congress.
Calvasina highlighted the disconnect between the investors’ views in the RBC survey, and some betting markets, which anticipate the growing risk of Democrats taking control of the Senate.
"Our June survey participants continue to think a Democratic sweep would be a negative event for the stock market, but a see a Senate that's tied between Republicans and Democrats as a neutral event for the stock market," Calvasina added.
Approximately 57% of investors see Republicans maintaining control of the Senate, a decrease from 68% in the March survey, and 82% in the December survey. Nearly all of the investors, 95%, believe the House of Representatives will remain under Democratic control.
Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter.
