Super Tuesday could rock stock markets around the world

As the Democratic presidential contenders scramble to capture delegate votes ahead of March 3, we take a look at the importance of one of the most pivotal dates in the Presidential Election campaign and the market impact:

Article updated: 28 February 2020 2:00pm Author: Ian Forrest

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  • Markets to be reassured if centrist Democratic candidates emerge as frontrunners after Super Tuesday primaries
  • If Bernie Sanders enjoys a delegate windfall, markets are likely to show concern as his policies have proven to unnerve the market
  • UK market likely to mirror the US, especially the larger companies in the FTSE 100, so it might fall back if Sanders secures big wins on Tuesday

Super Tuesday is arguably the day the presidential election really gets started in earnest. It's the day when the greatest number of states across the Union holds primary elections and caucuses. Convincing wins in Super Tuesday primaries have historically propelled candidates to their party’s nominations and with President Trump certain to win the Republican nomination, the markets will be paying especially close attention to the Democratic race.

Bernie Sanders is leading the pack after the first three states but that could change dramatically as more than a third of the overall votes up for grabs will be decided on Tuesday.

The Senator from Vermont is starting to command attention from investors as his policies have unnerved the market. The policies include big tax increases and regulations for corporations as well as trillions of dollars of spending commitments in health, education and infrastructure.

When the presidential candidates announced they were standing, a lot of commentators expected the more moderate names such as Joe Biden, Pete Buttigieg and Amy Klobuchar to have the best chance of winning the nomination to run against President Trump in November but so far they’ve failed to attract much support.

Media tycoon and former New York Mayor, Michael Bloomberg, started his campaign recently but made quite a poor start at the Las Vegas hustings. He’s already spent a small fortune on adverts but to little effect so far.

Perhaps the fact he stood as a Republican during two of the three terms he spent as mayor still rankles with some on the left in the Democratic Party. However he would certainly be a more acceptable nominee for many in the markets than the self-described democratic socialist Sanders or Elizabeth Warren, the Massachusetts senator.

It’s still early days in the contest and there’s been little sign of any reaction in the markets but that could change if there is a clear Democratic winner on Tuesday. Given that the votes so far have been fairly well spread across the candidates that seems unlikely which will please the incumbent in the White House – a divided opposition is much easier to beat.

If Biden, Buttigieg or Bloomberg emerge as a clear frontrunner on Tuesday the markets would be reassured but if Sanders maintains or extends his lead, some in the markets might be concerned. The UK market often follows what happens in the US, especially the larger companies in the FTSE 100 index, so it might fall back if Sanders continues to do well, but investors shouldn’t panic just yet as there’s still a long way to go.

Perhaps the key point here is whoever emerges on the Democratic side will face a stiff uphill battle against Trump given the relatively healthy state of the US economy and the fact the administration seems to be edging towards a trade deal with China. It was no great surprise that Trump’s approval rating recently hit the highest level of his presidency so far.

US markets rose to record highs earlier this year although the coronavirus outbreak has caused a pullback more recently. Valuations remain quite high in many sectors but the fact many Americans feel better off as a result of the long bull market for stocks makes the task ever greater for the Democrats as fewer voters will want to rock the boat by changing the President at this point.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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