It’s going to be a long session. Already the markets have moved from some rather deep losses to a far more mixed picture, as investors try and digest a closer than forecast US election.
Trump followed up his surprise Florida win with a speech designed to undermine the integrity of the race itself, urging more votes to be counted in Arizona – a state he lost minutes later – while calling for the results to be announced in the key state of Pennsylvania, where he currently leads with a lot of the vote left to be counted.
Joe Biden’s victory in Arizona, and then Maine, helped calm the markets after an initially rough open. However, they are still in a very different mood than they were yesterday.
On Tuesday investors were acting like a Biden win was a foregone conclusion, with a blue wave set to deliver a huge stimulus package. Now the Democrats are unlikely to take the Senate, and many UK bookmakers have Trump odds on to the win the election – SpreadEX is offering the incumbent at 1/2, with the challenger at 7/5, flipping from where they were this time 24 hours ago.
And with two major counties in Pennsylvania reporting their last updates of the evening, the markets are facing a session filled with uncertainty as to who will be the next President of the United States.
What is going to be interesting is how markets react if Biden does win, but without a blue Senate, hampering his ability to deliver the kind of stimulus investors were banking on. Similarly, what will a Trump victory mean for traders? It would potentially see a relief bill passed a lot quicker, but likely in a smaller form than the kind of deal the Democrats would’ve produced.
Pulling back from some precipitous declines at the start of the session, the European indices found themselves nudging back towards positive territory as the day got underway. With the pound down 0.7% and 0.4% against dollar and euro respectively, the FTSE managed to climb 0.2% higher, while the CAC erased most of its early losses to sit down around 0.1%. The DAX was the one major holdout, falling 100 points to tumble the wrong side of 12,000.
And what of the Dow Jones? Closing 550 points higher last night on the same blue waves hopes as its European peers, the index is eyeing a fairly flat open this afternoon – though there is plenty between then and now that could change that.
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