Apple Inc (NASDAQ:AAPL), Google parent Alphabet Inc (NASDAQ:GOOG) and the rest of the world’s big tech firms could be facing the worst outcome for their future if Joe Biden manages to win the US presidency on Tuesday, an outcome that most polling is currently predicting as the most likely result.
On Monday, Rachel Winter, associate investment director at investment manager Killik & Co said the worst outcome for the sector will “arguably be a Biden victory” followed by the appointment of Massachusetts Senator Elizabeth Warren to a senior role, due to her support for breaking up large technology companies.
Warren already has a track record of taking on large corporates, having risen to prominence during the 2008 financial crisis for her strong advocacy for strong banking regulations as well as her establishment of the Consumer Financial Protection Bureau.
“Apple, Amazon, Alphabet and Facebook would be expected to fall if [Warren] were to be granted a significant level of authority”, Winter said.
Oil giants could also slip
Meanwhile, Winter also warned that a Biden victory will have negative repercussions for US oil & gas giants such as Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX), while also boosting players in the renewables industry.
“The biggest difference between the candidates is their attitude to fossil fuels and renewable power. Trump is a big supporter of the fossil fuels industry, praising it for generating revenue and jobs for the US. Biden is supportive of the transition to renewable power. A Biden victory would deal a blow to US oil giants such as Exxon Mobil and Chevron, while creating further opportunities for renewable infrastructure companies such as NextEra”, she said.
Contested result could see gold as a winner
While most polling indicates a Biden victory, there are lingering concerns that a close or unclear election outcome, as well as the possibility that one candidate will not accept the result, could result into a prolonged period of political and social upheaval in the US, driving down risk appetites among investors.
In a note, analysts at RBC said gold will “likely be one of the principal asset classes where investor unease will be expressed if there is no clear winner announced on election night”, adding that investors “should at least prepare for an extended uncertainty scenario”.
“On top of gold's impressive run in 2020, the possibility of post-election turmoil and a contested outcome represents a significant risk in our view, and one that could prove quite gold positive in the most extreme scenarios. Gold’s unique properties and lack of true substitutes could make it appealing if this type of uncertainty pervades markets”, RBC said.
Analysts at JP Morgan have also said the coming weeks “could be rocky” in the event of a contested election, suggesting that investors “use any weakness to reposition the portfolios for 2021”.
The investment bank has also echoed sentiments of other analysts, saying traders should look to “take profits in Tech” and to add Financial such as banks and insurers to portfolios.