BlackRock Commentary: U.S. election through a sectoral lens

Mike Pyle, Global Chief Investment Strategist together with Elga Bartsch, Head of Macro Research and Scott Thiel, Chief Fixed Income Strategist, both part of the BlackRock Investment Institute, share their insights on global economy, markets and geopolitics. Their views are theirs alone and are not intended to be construed as investment advice.

The potential outcomes of the November U.S. election could have starkly different policy ramifications, as we argued last week. What will this mean for equity markets? We believe simplistic narratives about the overall market direction are best avoided – and see the biggest election-related implications playing out within asset classes and sectors. We zero in on energy, tech and healthcare.

Article image 1

Sources: BlackRock Investment Institute, with data from the U.S. Energy Information Administration, October 2020. Notes: The electricity generation is from utility-scale facilities. Data for 2019 are preliminary.

A win by former Vice President Joe Biden – along with Democrats taking control of the Senate – could help accelerate a shift toward sustainability that is already under way. His climate policy would focus on four areas: electric power, transport, buildings and research and development (R&D) spending. The share of electricity generated by renewable sources has grown steadily in the U.S. – from 10% in 2010 to 17% in 2019 – according to the U.S. Energy Information Administration. See the chart above. A Democratic sweep could accelerate the decarbonization of the power sector, by extending and expanding tax credits for renewable power sources and other zero-carbon industrial sources such as carbon sequestration. The Biden campaign has also proposed significant investment to reduce emissions in the transport sector, and to retrofit commercial and municipal buildings to increase their energy efficiency. Industries such as solar may already have largely priced in the transition to clean energy, yet we see other opportunities, such as energy-efficient technologies and offshore wind power.

How much of Biden’s climate policy proposal would become reality if he won the election? A Democratic sweep would likely lead to a large boost to public investment in clean energy. Fiscal spending would be significantly more constrained under a Biden win with divided government. Much could still happen on the regulatory front, such as tightening rules on oil and gas exploration, production and transmission. A crackdown on drilling and pipeline permits could constrain U.S. shale supply and push oil prices up, especially as demand recovers post-COVID. Yet any spike in oil prices may not be sustained given the prospect of an accelerating shift to clean energy in the transport sector. We see opportunities in private markets across renewables, digital infrastructure and transport regardless of the election result, given the structural shift to sustainability.

The tech sector – which has led the market in 2020 – is also in the spotlight. Concerns around data privacy and market power make tech regulation an area of growing bipartisan concern. Yet a Biden administration would likely bring more strenuous anti-trust reviews, including around issues such as wages and platform power. Tax reforms in a Democratic sweep scenario could also weigh in particular on global tech giants. We view the regulatory risks faced by mega-cap tech companies as manageable overall, as many have already adjusted to tougher data privacy rules in Europe. We see potential for leadership within the sector to broaden to a wider set of beneficiaries across different themes including 5G connectivity. Software and semiconductors could lead the charge, as they face fewer regulatory risks and enjoy long-term growth trends. Some tech companies could also benefit from the clean energy transition and a shift toward greater energy efficiency.

We see healthcare policy as relatively stable in the first year of a potential Biden administration – as opposed to early in the first terms of President Barack Obama and President Donald Trump, when it was a principal focus of the policy discussion. COVID response, economic recovery and climate-related initiatives would likely take priority in 2021, in our view. A risk to this view: The Supreme Court is scheduled to hear a case on the Affordable Care Act a week after the election, potentially pushing the healthcare debate back to the front burner. Measures to curb drug price increases are a potential focus – regardless of the election result. Yet we would expect only modest action against the backdrop of the pandemic, as drug makers are playing an important role in vaccine development and COVID response. Overall we favor medical devices, life sciences and diagnostics companies, as well as some diversified large-cap pharmaceuticals in Europe.


Market Updates

Article image 2

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index. Sources: BlackRock Investment Institute, with data from Refinitiv Datastream, October 2020. Notes: The two ends of the bars show the lowest and highest returns versus the end of 2019, and the dots represent year-to-date returns. Emerging market (EM), high yield and global corporate investment grade (IG) returns are denominated in U.S. dollars, and the rest in local currencies. Indexes or prices used are: spot Brent crude, MSCI USA Index, the ICE U.S. Dollar Index (DXY), MSCI Europe Index, Bank of America Merrill Lynch Global Broad Corporate Index, Bank of America Merrill Lynch Global High Yield Index, Datastream 10-year benchmark government bond (U.S. , German and Italy), MSCI Emerging Markets Index, spot gold and J.P. Morgan EMBI index.

Market backdrop

Economic activity is still running ahead of expectations in developed markets, albeit at different paces due to varying virus dynamics. COVID infections have picked up in Europe and parts of the U.S. President Trump has tested positive for COVID-19, against the backdrop of a race that has remained largely stable despite historic events including the deadly pandemic, mass unemployment and racial tensions. Negotiations continued on a new U.S. fiscal package, with a softer-than-expected September jobs report adding urgency even as the political parties are far apart and the legislative window is closing.

Week Ahead

  • October 5th: Services purchasing managers’ index (PMI) for the U.S., Japan, France and Germany; euro area composite PMI
  • October 6th: Germany industrial orders and output; U.S. international trade
  • October 9th: China Caixin services PMI

This week will see a flurry of PMI data in the services sector of key economies – providing markets with some gauge on the state of the recovery in the sector that has been lagging the restart in manufacturing. Data from some European countries where COVID infections have risen will be of heightened interest to markets.

BlackRock’s Key risks & Disclaimers:

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of October 5th, 2020 and may change. The information and opinions are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are often heightened for investments in emerging/developing markets or smaller capital markets. 

Issued by BlackRock Investment Management (UK) Limited, authorized and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL.

MeDirect Disclaimers:

This information has been accurately reproduced, as received from  BlackRock Investment Management (UK) Limited. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment and may be deducted from the invested amount therefore lowering the size of your investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.


We strive to ensure a streamlined account opening process, via a structured and clear set of requirements and personalised assistance during the initial communication stages. If you are interested in opening a corporate account with MeDirect, please complete an Account Opening Information Questionnaire and send it to

For a comprehensive list of documentation required to open a corporate account please contact us by email at or by phone on (+356) 2557 4444.