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The electoral chaos in the US is causing serious turmoil in the European stock markets.
“We’re seeing a nightmare situation come true, because now it’s all about legal battles,” said analyst Naeem Aslam of brokerage Avatrade. Although final results were not available for many major US states, US President Donald Trump declared himself the winner of the election. without providing evidence. At the same time, Trump spoke of fraud against the electorate and announced that he would go to the Supreme Court.
In Frankfurt, the DAX temporarily fell as much as 2.0 percent to 11,848 points on Wednesday morning. The domestic ATX was profitable for a short time in the morning after a weak start, before falling slightly to 2,141 points again shortly before noon. The EuroStoxx50 lost 1.8 percent to 3,043 points. In the course of trading, the index offset the losses and temporarily turned positive.
In the run-up to the US elections, investors had been betting primarily on the victory of Democratic challenger Joe Biden, but stockbrokers are now increasingly betting on a second term from US President Donald Trump. The mood especially changed when Trump won the victory in Florida. Also in other major swing states, which sometimes elect Republicans and sometimes Democrats, the head-to-head race was much closer than what was predicted in the polls. “Now exactly what happened in the run-up to the US presidential election was not at all the dream scenario of the stock exchanges,” said Jochen Stanzl of the trading house CMC Markets.
The uncertainty led to wild market fluctuations. Futures on US stocks in particular rose and fell. “Markets will overreact to even the smallest news,” said AXA group chief economist Gilles Moec in London. This especially applies to any statement about potential legal disputes. The dollar also went on a roller coaster ride. It made up for initial losses in the course of trading, gaining about one percent to 93.9 points against a basket of currencies. By contrast, the euro and the pound fell sharply at times.
Some investors saw Trump’s possible second term as the most favorable scenario for the stock market. In the United States, technology stocks rose in particular. Tech stocks in particular should benefit from the Republican’s second term, said Andrew Brenner, an analyst at NatAlliance Securities. Under President Biden, they are likely to develop significantly worse, not least because Democrats had criticized the industry in hearings and because higher corporate taxes threatened to overburden businesses.
A week-long hangover was seen as the worst-case scenario for the markets. The still uncertain outcome led investors to opt for government bonds, which are considered safe. In return, the yield on US stocks with a ten-year maturity fell to 0.766 percent and was therefore lower than it has been in a good five months. There was also demand for European newspapers. The performance of German stocks fell to minus 0.671 percent, which is lower than it has been since the peak of the first corona wave in mid-March.
Bank stocks under pressure
The chaos in the elections put pressure on banking stocks in Europe. The corresponding index lost as much as 3.6 percent and thus led the losses on the pan-European Stoxx 600. Deutsche Bank analysts expressed concern that it could be days or even weeks before the final election result is available.
Shares of European wind energy companies also fell to their knees. Vestas, Nordex and Siemens Gamesa shares fell between 9.6 and 12.7 percent. The mood was particularly depressed over the fact that Trump could remain in the White House for another term. In the event of Democrat Biden winning the election, many investors had opted to expand renewables. Biden had promised two trillion dollars (1.7 trillion euros) in investments for the exit of fossil fuels in power generation by 2035.
In the individual shares of the German DAX, the largest German real estate group, Vonovia, was one of the price winners. The shares were up more than 3 percent. The group expects the 2020 result to be at the higher end of the forecast despite the crown crisis. On the other hand, BMW stocks fell by around one percent. Despite a significant profit increase in the third quarter, the automaker was cautious about the year as a whole. At the Vienna ATX, oilfield provider Schoeller-Bleckmann (SBO) was the biggest growth with 2 percent late in the morning.
(APA / Reuters)
