Explained: Why Georgia’s runoff election is important for the markets

Control of the U.S. Senate is at stake with Tuesday's dual runoff elections in the state of Georgia, and the results may ripple through a stock market that closed 2020 at record highs.

Why is it important? Every US state selects two senators and currently, there are 48 senators for Democrats and 50 for Republicans. So, if the Democrats get both the Georgia seats, then there will be a 50-50 tie. In case of a tie, Democrat Vice President Kamala Harris will have a casting vote.

If Georgia were to elect two Democratic senators, then for the first time in many years, there will be a Democratic House, Senate, and Presidency. This is seen as a danger for US markets as the Democrats have proposed tax hikes to give a fiscal boost.