This horror can still be ugly on the stock markets – E24

A prolonged US election was exactly what the world stock markets did not need. All investors should now keep their eyes fixed on the United States.

Published:Published: November 4, 2020 7:42 am

How awful this election night has been. Full of surprises and with a significantly stronger performance from President Trump than many expected. Forget the so-called democratic blue wave. This will not be an easy road to power for challenger Joe Biden. Trump’s reelection is entirely possible.

Add In the eyes of an investor, such a short-term quagmire is an unpleasant outcome. Because the market should and should hate uncertainty. The nightmare is an end result that lasts for days, weeks, and possibly months, and sets off a long-running legal and mental trench warfare.

One such The tightening can also cause severe disturbances and turbulence in the world’s stock markets, and sharp fluctuations in interest rates, currency and commodities such as oil. A situation that also tends to weaken the Norwegian krone’s illiquidity, as investors flee to safe world currencies like the dollar. Just as we have seen the trends tonight.

In the twig of the morning however, this is not primarily what characterizes markets. Asian stock markets rose. Nikkei in Tokyo by more than 2 percent. And futures trading on Wall Street indicates a strong open there this afternoon, especially for tech stocks. We are somewhat optimistic that a Trump victory will ensure that the information technology giants are not regulated as a good number of Democrats want.

But this optimism doesn’t have to last. Futures trading is also a fraction of actual trading during normal stock market opening hours. Looking ahead, a lot depends on how long we have to wait for a final clarification.

Designate a ready wins instead of what it seems now, this can also go quite well in the markets. But in the highest degree it can also be prolonged. How bad it will be then is impossible to predict. But if economic guru Nouriel Roubini is to be believed, a long-running controversial election could send stock markets down by roughly 10 percent.

And more postal votes have also not yet been counted. If we have an electoral drama over time, it can also be very difficult to get a final winner. President Trump may never accept an electoral defeat. In a disturbing article, The Atlantic puts into words how dire that scenario can get.

We can still I look forward to more clarity beyond the morning and morning Norwegian time. What is becoming increasingly clear, however, is that we can forget about a true democratic grand slam, with a superior take on both the White House and both houses of Congress. At least with a broad and powerful mandate.

So smoke also the possibility of a strong political impact. A new rescue package that will remedy the real economic consequences of the pandemic seems more uncertain. The likelihood that a potential President Biden will be able to pass comprehensive stimulus packages for green energy and infrastructure is also decreasing.

Opposite will Of course, a Trump 2.0 is also struggling to overcome big packages that can accelerate both the real economy and corporate profits. Because the Democrats will continue to control the House of Representatives in all cases. As bitter as the tone in American politics has become, many cross-party initiatives will still be born dead.

Some benefits Of course, there may also be minimal political action. Politically controversial cross-party moves, such as a possible tax on democratic technology, are unlikely to occur when no party has good control over all the powerful citizens of Washington, DC.

But overall It is what the United States and the world economy need now, political action. And in the short term, above all, a powerful new pandemic rescue package. That such interventions with the evening’s events seem less likely is not good. Not for the wallets of ordinary Americans or for the savings of investors.

Absolutely There is little to rejoice so far this election night. And as The Atlantic article reminds us, nothing is ready until everything is ready. The relatively light mood in the markets this morning can easily change.

Even further therefore, all investors should keep their eyes reasonably fixed on the harrowing drama “over there”, also to protect their own portfolio of stocks.