In this news, we discuss the Analysts’ View: U.S. stock futures dip as election results trickle in.
(Reuters) – US stock market futures plunged on Tuesday as early voting forecasts for the US presidential election pointed to a close result, creating uncertainty for markets.
Investors had hoped to avoid a protracted process that would delay any stimulus to help an economy recover from the coronavirus pandemic.
E-Mini futures for the S&P 500 ESc1 fell 0.1% in a volatile session, after rising 1% previously.
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Signs that President Donald Trump could win Florida have dampened expectations of a quick result and saw 10-year Treasury yields fall to 0.85% US10YT = RR from a five-month high of 0.93%.
The US dollar also reversed its first losses and gained 0.45% on a basket of currencies at 93.56 = USD.
THOMAS HAYES, PRESIDENT, GREAT HILL CAPITAL, NEW YORK
“I think the market came with a strong expectation of a blue wave and now they have to look at a status quo situation. If Trump wins, the corporate rate will stay the same, which is the biggest problem for the stock market where he could lose up to $ 20 in S&P profits if tax rates rise.
“The best case is going to be a dead end, whether it’s a Biden or a Trump presidency. I think the market is reassessing its assumptions. If you don’t have a blue wave, you will have a smaller stimulus. “
SIMON WESTON, SENIOR ASIAN EQUITY PORTFOLIO MANAGER, AXA INVESTMENT MANAGERS, HONG KONG
“The markets entered the election tally, as if they expected a ‘blue wave’ or at least a definitive victory for Biden.
“However, the count so far suggests the results will be much closer than that, with the key state of Florida appearing to be going for Trump. This raises the prospect that we might get a contested election, or at least one where we don’t get a result for some time, because the votes take a long time to be counted.
“This higher uncertainty has seen a lot of these early trades reverse – with the dollar appreciating and markets pulling out of opening highs… this caution will likely continue until we get a more indication. clear of the result. “
JAKE DOLLARHIDE, CHIEF EXECUTIVE OFFICER, LONGBOW ASSET MANAGEMENT, TULSA, OKLAHOMA
“The blue sweep argument is about an immediate stimulus, like a sugar high. Trump is doing better than investors thought is the ultimate chaos. If you’re expecting a blue sweep and all of a sudden Trump looks competitive and looks like he can win, then you’re throwing caution to the wind. If Republicans start winning Senate seats again and you have a stalemate, the market could collapse. But in the longer term, you could lead to lower taxes and higher stock prices as the recovery continues.
“S&P futures favor high sugar, a blue sweep is great. The market is thinking of the shorter term. The market favors certainty, and Trump appears to be doing better than investors thought. “
DAVID TAWIL, PRESIDENT, MAGLAN CAPITAL, NEW YORK
“I think even within 24 to 48 hours of the results we still won’t know the long term effects in the markets. Merely as a repeat of history, surely no one has been able to predict what happened in the wake of Trump’s surprise victory in 2016 and the markets boost overnight that followed. produced the next day. I don’t think we’re going to be surprised other than a repeat of this, which is chaotic.
“I’m afraid (of contested). It’s my biggest fear, on the day of the inauguration, we don’t have a president. The one thing all investors pray for is that in a short period of time there will be one clear winner, because anything else would be catastrophic. It may not be catastrophic in the long run, but the intermittent days will be some of the scariest we have seen. Truly unknown uncharted territory and fear will rage.
JAMES LEUNG, DIRECTOR OF MULTI-ASSET ASIA PACIFIC, BARINGS, HONG KONG
“If the outcome of the election were to become very controversial, resulting in significant market weaknesses, we would be buyers rather than sellers.
“Asia was also our favorite region ahead of the elections and the outcome of the elections is unlikely to significantly alter the region’s economic recovery. We remain constructive on the region on medium-term prospects … if the US president-elect takes a more collaborative approach to trade with the country’s trade partners, Chinese actions should be well supported.
KEITH LERNER, CHIEF MARKET STRATEGIST, TRUIST / SUNTRUST ADVISORY, ATLANTA
“The bottom line for the market right now is that they were hoping to get some clarity and for that we went to bed and it would be a known event. Right now the first indications are that this is closer than expected and that we may not have clarity by the end of tonight.
“That’s why you saw a reversal. The goal of achieving more clarity may be delayed longer than the market expected. “
Compiled by the Global Finance & Markets Breaking News team; edited by Richard Pullin
Original © Thomson Reuters