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What the market feared most in the US elections became a reality. And it is that the vote count is showing that the election of the new American president will be narrow, opening the door to the uncertainty that this generates.
In fact, at dawn Trump declared himself the winner of the contest and asked to stop the vote count, which is why he announced that he will go to the Supreme Court, which leaves investors more nervous.
At this time, Bloomberg and The Wall Street Journal give the Democrat Joe Biden 238 electoral votes and the current president, Donald Trump, 213 of the 270 necessary to win the White House. Donald Trump surprised by winning important states like Texas and Florida. Joe Biden managed to wrest Arizona from the Republicans.
In the previous days, analysts had anticipated that in the early hours of Wednesday the volatility was it would take the markets before the close electoral contest. With the first counts the Wall Street futures went down after a positive previous day, but as the hours went by they took a positive course for a while. This morning, the markets reacted with mixed results, but at this time they are scoring blue numbers.
On Wall Street, the Dow Jones climbs 0.98%, the S&P 500 is up 1.78% and the Nasdaq is up 2.56%.
In Europe, the French Cac 40 registered an increase of 1.27%, the UK’s Ftse 100 is up 1%, while the German Dax and the Euro Stoxx 50 are up 0.82% each. The Spanish Ibex 35 fell 0.51%.
In Asia, with markets already closed, the Japanese Nikkei 225 rose 1.72%, the Chinese Csi 300 climbed 0.76% and the Shanghai Comp gained 0.19%. Hong Kong’s Hang Seng lost 0.21%.
Julius Baer Chief Investment Officer Yves Bonzon says this “is clearly the worst case scenario for the markets, one of a very tight result, subject to challenge, legal proceedings, multiple vote counts and even riots across the country. In this scenario, risk assets will clearly not react well. Exceptionally, I will hazard a prediction. Let me specify that it is a sentiment, not scientific. I believe that the outgoing president will be re-elected. In this case, the absolute and relative trends of the past will continue. years. This favors the dollar, even if we still believe that it is premature anyway to expect a massive downgrade of one of the major developed currencies against its peers. ”
Effect on the dollar and fixed income
According to a report by Julios Baer, the tight US election result and associated uncertainty provide short-term support for the currency.
“Once the election result is known, a divided government would support the US economy and moderately weaken the dollar. A blue wave has the potential to further influence the longer-term dollar outlook, while increasing the odds. of a faster recovery. The pending US election outcome keeps uncertainty high, supporting the dollar in the short term given its safe haven characteristics. Looking beyond short-term uncertainty, a divided government, whether under President Trump or under President Biden, it will provide moderate support to the economy and we expect the dollar to weaken, reflecting a growing appetite for risk, “the report states.
Regarding fixed income, the Swiss bank indicates that the short-term prospects for the Treasury market depend on the outcome of the US elections.
A “Blue Wave” of a Biden presidency and a Democrat-controlled Congress would open the door to higher fiscal spending and higher fiscal deficits, leading to higher growth and therefore steepening the curve performance, “they explain.
Copper down
Commodities also suffer from this uncertainty, especially when a Biden victory gave more hope of an improvement in the US relationship with China.
But with the uncertain outcome, copper loses ground on the London Metal Exchange. According to data provided by the Chilean Copper Commission (Cochilco), Chile’s main export product lost 0.64% and closed the day at US $ 3.06 per pound.
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