US election campaign: this is why the stock exchanges are applauding despite the stalemate

Who will be the president of the United States for the next four years, Donald Trump or Joe Biden? This has not yet been decided the day after election night. Now it can go very fast, but a race of several days or even weeks is also possible.

The uncertainty in the stall is great. The whole world is eagerly awaiting the results from the United States. The fact that Trump spoke of “fraud” in view of the delay in the election result created further irritation.

The economy is also nervous. Stock analysts have in fact hypothesized a clear result with a march by the Democrats, the so-called blue wave, in which they would provide the president and the majority in the Senate would take over from the Republicans. Trump was no longer the favorite of stockbrokers.

However, it’s not that important to investors that he becomes president. “What matters is a clear result. Uncertainty is the most uncomfortable thing for them, because in that case they cannot invest with foresight, “ZKB economist Claude Zehnder told 20 Minuten.

But stock traders are proving flexible despite the stalemate in the US. Although there was a short drop in some indices such as the DAX on Wednesday morning, by the end of trading it had gained 1.95%. “Over the course of the day, all major indices in Europe rose between 1 and 2 percent,” says Zehnder.

There has also been a revival on Wall Street. The Nasdaq tech index rose 2.54% early on. The Dow Jones also broke the psychologically important 28,000 points mark during the day.

Why have equity markets turned positive? Matthias Geissbühler, Chief Investment Officer of Raiffeisen Switzerland, explains this with the fact that the Republican Party can defend the majority in the Senate. “This would mean that the forces would be well distributed even with Biden as president, and there would be no too big political changes, which is good for the markets,” Geissbühler said.

Since the blue wave did not occur, the Swiss Market Index (SMI) also benefited. In the evening it increased by more than 3 percent. Geissbühler explains that Biden wanted to push drug prices in the United States with a Democratic majority.

Therefore, pharmaceuticals have been performing poorly in recent months. Now the market assumes that there will be no significant regulations. As a result, the shares of Novartis and Roche rose by more than 3.5 percent and more than 5.3 percent, respectively.

However, the president needs to be known by the end of the week, says Geissbühler. Otherwise, the stock exchanges would be more heavily burdened. Investors should then wait until the outcome is known.