Biden’s increase on corporate tax rates could lower S&P 500 earnings by 5%: CIBC
A presidential victory for Joe Biden in the upcoming U.S. elections could have more “nuanced implications” for the Canadian stock market, with some sectors getting a modest boost, said CIBC World Markets’ Ian de Verteuil.
The analyst noted that the cannabis and industrials sectors could get some support if the White House is run by Democrats. Canada will be less of a target for U.S. tariffs or restrictions, aiding engineering and construction firms as less emphasis gets placed on the “Buy America” adage, according to Verteuil. A more liberal cannabis policy under the Democrats should accelerate the path to legalize weed in the U.S., he said.
“We expect corporate Canada to welcome a more ‘liberal’ U.S. president,” de Verteuil said in a report.
For the energy sector, there are both pros and cons.
“More environmental regulations south of the border (and possible reductions in U.S. fracking) might be welcomed by Canadian energy firms,” de Verteuil said.
However, he added that there is a possibility that the TC Energy Corp.-owned Keystone XL pipeline, strongly opposed by environmental activists and championed by Prime Minister Justin Trudeau, would be reviewed once again.
Here’s a look at the impact of a Biden triumph on other TSX sectors:
- Financials: Small impact with the potential for increased regulation on U.S. operations of Canadian banks
- Materials: Minor to slightly positive for the price of gold amid an increase in U.S. fiscal deficits due to heightened social spending
- Tech: Some positives since Biden has a “hands off approach” to regulating the sector. An open U.S. immigration system could be a disadvantage
- Utilities: Democrats’ New Green Deal may increase appetite for renewable power
- No impact: Communication services, consumer staples, real estate