Midterm election could be good news for stock markets, whatever the result, says Morgan Stanley

One of the most optimistic readings about the electoral scenario came from Mike Wilson, chief equity strategist at Morgan Stanley. According to MarketWatch, he claims that the election will be good news for the market regardless of the result.

Wilson classifies the midterm elections as a classic "compensation event," according to the report. For him, the outcome of the vote at this moment is not what matters most, and the simple holding of the election already works as a positive factor.

The argument thus separates the event itself from its conclusion. The thesis is that the market tends to benefit from the end of the uncertainty surrounding the dispute, even if reading the results may divide opinions.

On the other side of the debate, the analysis by The Economist, cited by Gazeta do Povo, is much less calm. According to the publication, there are reasons for the market's "consternation" with Lula's victory.

According to the same source, Lula's victory is related to the fall in the financial market. In other words, while Wilson maintains that the election itself is already positive, the Economist associates a specific result with a downward movement in assets.

At stake is the distinction between the event and the outcome. The first can be read as relieving uncertainty; the second, as a source of discomfort for investors who follow economic policy.

What changes for the investor

If Wilson's vision prevails, investors will tend to give less weight to the winner and more to the end of electoral uncertainty. If the Economist's reading is the dominant one, the focus returns to the result and what it signals about interest rates, exchange rates and fiscal responsibility, topics that deserve attention from those who operate the stock market, Nasdaq and the dollar during this period.

Automatically translated from Portuguese.