In this news, we discuss the Analysts’ View: Markets hold breath as final votes tallied in U.S. battleground states.
(Reuters) – US equity futures extended their gains in after-hours trading on Wednesday as ballots were counted in several states set to decide whether Democratic challenger Joe Biden topples President Donald Trump in an election that remains too close to be called.
S&P e-mini futures rose 0.9% on the heels of a 2.3% S&P 500 rally on Wednesday, motivated by the prospect of a deadlock in Congress after Democrats appear to have failed to gain control of the US Senate.
This sparked optimism that disruptive policy changes would be difficult to implement, regardless of who won the presidential contest.
Click here for the 2020 election coverage: here
At the start of Asian trade, the dollar index had given up its gains and was at 93.31, after hitting a one-month high of 94.308 during the US day.
US 10-year Treasury bill futures extended their gains after Treasury yields fell sharply on Wednesday.
ANDREW GILLAN, DIRECTOR OF ASIA-EX-JAPAN EQUITIES, JANUS HENDERSON INVESTORS, SINGAPORE
“A Biden victory is unlikely to result in a major shift in US foreign policy in the near term, so the direction of the dollar is more important with a weaker dollar more favorable to Asian and emerging market equities.
“Asian investors have anticipated a shift in flows from the outperforming and relatively expensive US market to international equities, but this has yet to happen in any meaningful way. Relative valuations and economic recovery in Asia would certainly justify this change in the medium term and perhaps optimistically, as a fund manager in Asia, the US election could mark a turning point and a chance for investors to reassess these fundamentals.
PHILIP BLANCATO, CEO, LADENBURG THALMANN ASSET MANAGEMENT, NEW YORK
“Assuming things stay somewhat as they are – Republicans will retain control of the Senate – it’s the best of both worlds. The market will protect its capital gains, and we’re going to get a stimulus package anyway.
“The worst possible outcome is a ‘blue sweep’ and a contested election. I think we’re going to have a decent rally for the rest of the year.
FABIANA FEDELI, GLOBAL HEAD OF FUNDAMENTAL EQUITIES, ROBECO, ROTTERDAM
“From a stock market perspective, a divided Congress at this point is the least desirable scenario, regardless of which side wins, as it could cause delays in policy execution and what we think is an essential short-term stimulus plan. .
“There are two equity trades here: In the short term, until the uncertainty over the outcome persists, we can expect investors to become more defensive and some of these ‘blue sweep’ trades that we’ve seen it crop up since summer and more. the last few days are likely to come undone: emerging stocks and currencies including China, the renewables theme and big tech cyclics. We’re also likely to see some relief in “ red tide ” trading, like oil, or Russia, which is a country that should face sanctions under a Biden administration. It could, however, be a very short term trade and just in place until we have some clarity on winning.
“In the end, which party wins will not determine the direction of the stock market but rather the sectors and – internationally – the selection of countries. What really matters are the type of policies implemented and the impact on the economy of developments in a COVID-19 outbreak.
JEFFREY HALLEY, SENIOR MARKET ANALYST, ASIA-PAC, OANDA
“For financial markets, however, the result is a godsend. Gone is the multi-trillion dollar fiscal stimulus. More monetary policy impetus will come as the Federal Reserve takes the burden off its shoulders.
“Even if President Trump made a miraculous comeback, this status quo would remain unchanged. So it’s hardly surprising that the US stock markets rose and the US dollar quickly canceled all of its gains yesterday.
“Of course, economic inequality and the ability to bridge that gap will increase, which will have an ironic impact on many Republican voters.
“The world is undoubtedly accumulating problems for another day in this regard. It won’t matter to the FOMO gnomes, however, with the global pick-up trade of any purchase booming overnight. If you’re not long on stocks, real estate, precious metals, and emerging markets, you probably should be. If you’re unemployed in a pandemic or can’t afford it, sorry, you’ll just have to wait for the revolution.
JIM WILDING, WEALTH MANAGER, PARTNER, CONFLUENCE FINANCIAL PARTNERS IN PITTSBURGH, PA
“A Biden presidency with a divided government (REP Senate, DEM Chamber) would most likely result in more lockdown and a more neutral impact on the markets. We could see increased spending on infrastructure and economic recovery, but limited legislative changes and limited support for tax increases.
“If Trump is re-elected and the Senate remains a Republican, we are unlikely to see a tax hike, which would be seen as positive by the market. Trade battles with China would likely intensify, and regulatory changes could accelerate even more. An infrastructure bill might also be possible.
“Hopefully we will have the election results before Thanksgiving!”
BRAD KARP, PRESIDENT OF THE LAW FIRM PAUL, WEISS, NEW YORK
“As postal ballots continue to be counted in several key Midwestern states, it now seems clear that Vice President Biden will secure the 270 electoral votes needed to become the 46th President of the United States. Almost as important as the final election result is the need for this result to be respected as legitimate throughout the county.
“The efforts of Mr. Trump and his lawyers to attempt to disrupt and discredit the vote count are disheartening and run counter to the fundamental principle of our democracy that every legitimate vote should be counted. Calls to stop the legal count of legitimate ballots, or, worse yet, baseless rhetoric questioning the results, should be stopped by Republican leaders. These cynical efforts both to ignore valid ballots and to undermine the results of a legitimate election have no place in our democracy.
Compiled by the Global Finance & Markets Breaking News team
Original © Thomson Reuters