Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

GLOBAL MARKETS-Stock turns positive in knife-edge U.S. election race

Published 11/04/2020, 11:10 PM
© Reuters.
EUR/USD
-
UK100
-
USD/MXN
-
USD/NOK
-
US500
-
FCHI
-
DJI
-
JP225
-
USD/RUB
-
DX
-
LCO
-
CL
-
NQZ24
-
US10YT=X
-
MIAPJ0000PUS
-
CSI300
-
DAX
-

(Updates vote results, prices throughout)
* Europe steadies after red start, S&P futures surge
* Trump vows to go to Supreme Court for victory
* Final result might not be known for a days or weeks
* Tech stocks gain on talk a Trump win would favour sector
* Dollar rally falters, 10-yr Treasury yields edging higher
again
* Gold retreats, oil adds to gains
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones and Wayne Cole
LONDON/SYDNEY, Nov 4 (Reuters) - Wall Street saw an early
surge and a rally in the dollar faded on Wednesday, as a
too-close-to-call U.S. presidential election left traders
betting on a divided Senate that would keep stimulus flowing but
hold tax rises and regulation in check.
Wall Street started with a tech-led surge but traders had
seen dizzying volatility as the razor-edged race left the final
outcome in doubt for days or even weeks. Democratic contender Joe Biden took to the air to declare he
remained optimistic about winning and called for all votes to be
counted, no matter how long it took.
President Donald Trump responded in trademark combative
style, saying he had won, that "they" were trying to steal the
election, and that he would go the U.S. Supreme Court to fight
for victory.
Investors had initially wagered that a possible Democratic
sweep by Biden could ease political risk and provide a boost to
fiscal stimulus.
The mood quickly changed as Trump snatched Florida and Ohio
and ran much closer in other battleground states than polls
predicted, only to then flip again in Europe as states, such as
Michigan, and betting markets leaned back to favouring Biden.
Wall Street's early 2% jump in the S&P 500 .SPX , 1% rise
in the Dow Jones .DJI and 2.5% climb in the Nasdaq <.IXIC came
after wild whipsawing overnight. .N
Wild futures markets had fallen when the race tightened,
climbed when the voting seemed to favour Trump, dropped again
when he vowed to make a Supreme Court challenge only to steady
and spurt higher again. .N
Europe's main bourses London .FTSE , Paris .FCHI and
Frankfurt .DAX were dragged along too. They overcame initial
drops to stand 1.3%-1.8% higher having also shrugged off data
showing the region heading for a double dip recession.
/EU Amundi's Head of Global Views Didier Borowski said prudence
was needed with the U.S. result in limbo.
"We expect an 85% likelihood of knowing the winner within
ten days." However, there is a "real possibility" it could take
until January, including the Senate. "This environment is
conducive to volatility and a retreat towards safe havens."

(For the latest results and news on U.S. election, click: https://www.reuters.com/world/us-election2020
)

Dealers said investors may consider a status quo result
would lessen political uncertainty and remove the risk a Biden
administration would roll back corporate tax cuts.
The technology sector found encouragement, with NASDAQ
futures surging nearly 4% NQc1 . E-Mini futures were last up
1.7%, a near 3% swing from the 1% drop seen when Trump vowed to
go to the Supreme Court. .N
Andrew Brenner, head of international fixed income at
NatAlliance Securities, said the move in techs appeared to be a
play on the Senate potentially staying Republican.
Brenner said that under a Biden win, tech stocks were seen
faring worse, as Democrats would be expected to tackle the
sector in hearings and because a potential rise in capital gains
tax would hit tech stocks harder.
Stéphane Monier, CIO at Lombard Odier said a divided
Congress would have "far-reaching implications for markets,
mostly because it means that any kind of pandemic recovery
package is still tough to approve".

TOO CLOSE TO CALL
In Asia, Japan's Nikkei .N225 finished 1.7% higher, while
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged up 0.4%.
Chinese blue chips .CSI300 rose 0.7%, with markets
uncertain how Sino-U.S. relations would develop.
Some investors hedged against the risk of a contested
election or at least a drawn-out process as mail-in ballots were
counted.
"It's a wait-and-see," said Matt Sherwood, head of
investment strategy at Perpetual in Sydney.
"I think the odds of a clean (Democrat) sweep are
diminishing, almost by the minute. That reduces the possibility,
or the likelihood at least of a large stimulus programme being
agreed to in the first days of a Biden administration."
That saw 10-year Treasury yields fall back to between 0.79%
and 0.82 US10YT=RR , having been at a five-month top of 0.93%
before the vote. The U.S. dollar also had a roller coaster session, falling,
then rising, before easing back to sit up 0.2% against a basket
of currencies at 93.392 =USD . The euro bounced back to $1.1717
from a hard overnight that had taken it as low as $1.1602
EUR= . /FRX
Emerging market currencies pinballed. The Mexican peso
MXN= recovered from a 2% tumble taken when the sudden chance
of a Trump victory sparked nerves about U.S. trade policies
continuing to favour tariffs.
Norway's crown NOK= , Australia's risk-sensitive dollar
AUD=D3 and Britain's pound GBP=D3 were all fighting back
too, China's Yuan spun to hit a 2-week high while the Russian
rouble RUB= , which had been one of the hardest fallers in the
election run-up, gave back overnight gains. EMRG/FRX
STILL TO COME
Investors await the outcome of U.S. Federal Reserve and Bank
of England meetings this week, which are expected to at least
give a nod to further stimulus following the latest acceleration
of coronavirus infections in Europe and the United States.
The Reserve Bank of Australia on Tuesday cut interest rates
to near zero and boosted its bond-buying programme, adding to
the tidal wave of cheap money flooding the global financial
system. Gold had been buoyed by the extensive liquidity but ran into
profit-taking on Wednesday, losing as much 1% to $1,887 an
ounce.
Oil prices overcome their own wobbles to reclaim gains made
after industry data showed crude inventories in the United
States dropped sharply. O/R
Dealers said a returned Republican administration would
likely be more positive for the oil industry than the Democrats
that favour renewable technology.
U.S. crude futures CLc1 were up 96 cents, or 2.6% at
$38.62 a barrel and Brent crude LCOc1 futures gained 2.9%
cents to $40.86. U.S.-listed solar shares of Enphase, Sunpower,
Sunrun and First Solar and Invesco's solar ETF TAN.P , which
have all been boosted by Biden's climate change concerns,
dropped by up to 7% in pre-market trade.


<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Key emerging currencies being split by U.S. election https://tmsnrt.rs/326Toa7
Global markets since Trump's election https://tmsnrt.rs/3jNwnis
World stocks market cap rise over last four years https://tmsnrt.rs/2TL19hh
S&P 500 futures take a wild ride https://tmsnrt.rs/3k13Sxz
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.