The US Democratic Primary election has been turned on its head AGAIN!
Only days ago, former Vice President Joe Biden’s chances of winning the nomination appeared to be rapidly fading.
Self-proclaimed Democratic Socialist Sanders appeared to be running away with the nomination, after picking up solid victories in early-voting states such as New Hampshire, Nevada and Iowa.
But after securing a dominant victory in South Carolina over the weekend, Biden enjoyed a bounce in national polling.
In a huge upset, Joe Biden appears to have been able to convert this bounce in the polls into a victory in last night's Super Tuesday vote; where roughly 1/3 of Democratic Party members had their chance to have their say on who will lead the party against Trump in November.
Biden outperformed in a number of states, but most importantly, secured a surprise win in Texas, the second-largest state by population in the country. As in other states, notes analysts at CNBC, Biden dominated among older voters, while Sanders showed strength with young voters, according to exit polls. In the case of Texas, 62% of the electorate was older than 45, while 38% was between ages 18 and 44.
According to the current delegate count, Biden is now ahead with 453 whilst Sanders trails with 382.
Betting markets now have Biden as the clear front runner to secure the nomination; betting odds being traded on Smarkets imply Biden has a 75.19% chance of winning while Sanders’ chances have slipped to 18.67%.
It is too soon to say that Sanders is out of the race, however. He will likely pick up a victory in the largest US state by population, California, which will provide a decent boost to his chances of victory.
Biden is seen as a more market friendly candidate for President than Sanders, on account of his more “moderate” policy proposals. For example, he will be seen as less harsh on the rich and corporations (which will be good for the stock market), he is seen as less likely to increase taxes (which would be seen as a bad thing for the economy) and is seen as less protectionist when it comes to international trade policy (which is seen as both good for the economy and the stock market).
Therefore, we are seeing Biden’s higher chances of ultimately winning the nomination and getting to run against Trump reflected in the US stock market this morning.
The major US indices are leading global stocks higher, with Nasdaq 100, Dow and S&P 500 futures all roughly 2% so far today.
As long as Biden does not blow this lead, that should remove one downside risk for US and global equities. However, the major focus of the market is likely to remain on the spread of Covid-19 and how global policymakers respond.
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