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Major global stock exchanges showed strength on Wednesday, despite uncertainty in the count of votes in the US presidential election, an extremely close election between Joe Biden and Donald Trump.
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In Colombia, stock prices rose 0.4%, according to the Colcap index which brings together the major stocks, and the dollar fell an average of 16 pesos compared to the representative market rate (TRM) in effect on Wednesday, and The TRM for this Thursday will be 3,807.13.
Although the US presidential election provided the scenario that investors liked least, with an uncertain outcome and the possibility of current President Donald Trump contesting the recount, markets remained calm after a bearish opening.
After opening at a loss, the European markets recovered and closed higher. London won 1.7 percent; Frankfurt, 2 per cent; Paris, 2.4 percent. Madrid won 0.45 percent; Milan, 1.96 per cent. Meanwhile, there were strong gains in New York: the Dow Jones added 367.63 points and stood at 27,847.66, with gains of 1.34%. The selective S&P 500 rose 2.2% or 74.28 points, to 3,443.44 units, and the Nasdaq composite index, which brings together the largest tech companies, advanced 3.85% or 430.21 points, up to 11,590.78 units.
Even during the day there was euphoria. In the middle of the session, the New York Stock Exchange reached intraday highs: with the main indicator, the Dow Jones of Industrialists, up 727 points (2.65 per cent); the S&P 500, which represents the broad market, gaining 108 points (3.19%) and the Nasdaq index, rising 474 points (4.25%).
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In Asia, the Nikkei index of the Tokyo Stock Exchange closed sharply higher at 1.72%. Hong Kong’s Hang Seng closed 0.21% lower, Shanghai’s index gained 0.19% and Shenzhen’s 0.31%.
In addition to the US elections, Chinese markets suffered the blow of the announcement on the eve of the postponement from the IPO of Ant Group, the Chinese online payment giant, which weighed down the shares of Alibaba, the former parent company.
“There is a great deal of uncertainty about what Trump says on election fraud and his intention to appeal to the Supreme Court, “analyst Naeem Aslam told AFP.
“Trump just declared war,” said Markets.com’s Neil Wilson, for whom these statements by the president explain the initial drop in the indices. By mid-day, uncertainty grew due to the apparent recovery of his Democratic rival, Joe Biden, who was taking advantage of Michigan and Wisconsin, two key states in the north of the country.
(Also: Biden wins in Wisconsin and increases his lead over Trump)
Jack Janasiewicz, of Natixis Investment Manager, believes that despite the uncertainty of the election result in the US, “the worst-case scenario, huge problems at the polls with widespread social unrest, has been avoided.”
Additionally, in his view, investors appreciate that Republicans are likely to keep the Senate, which will prevent a widespread tax hike.
However, the uncertainty will push investors to seek safe haven assets. According to Franck Dixmier of Allianz Global Investors, moves towards safe assets such as US Treasuries and the dollar are expected.
(Also: What is the voting situation in the 6 key US states?)
As for the impact of the election results on the economy, analysts agree that this is not a good scenario. “Not having a clear election result is the worst possible outcome for the economy as hopes of a stimulus fade,” says Schroders’ Keith Wade.
“Situations of uncertainty, when they persist, tend to be detrimental to economic growth as they force investors to be extremely cautious. This translates into more savings and less consumption,” explains Manuel Maleki, an economist at Edmond de Rothschild.
Waiting for legal issues
The Schwab Financial Research Center noted in a statement that the presidency “hangs in the balance” of the pivotal states of Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin, where the tally can drag on all week, a scenario that “was not unexpected. “but it can lead to” volatility, “explained its chief investment strategist, Ann Sonders.
“Investors fear that voting disputes, recounting and legal issues could leave the presidential race unresolved for weeks,” he added. “If this were to end in the Supreme Court, it would take even longer to know the outcome and we could face what would be perhaps the worst case scenario of all we are considering at the moment,” agreed Investing.com analyst Jesse Cohen.
Oil on the rise
For its part, the oil market was surprised by a decline in reserves in the United States. According to data from the US Energy Information Agency (EIA), crude oil reserves stood at 484.94 million barrels as of October 30, compared with 492.4 million barrels as of October 23, a decline of 8 million. barrels.
This increase temporarily eased investor concerns about a possible slowdown in demand due to the restrictions caused by the coronavirus.
At the close of the day, the price of a barrel of Brent crude for January delivery closed this Wednesday on the London futures market at $ 41.24, 3.93 percent higher than the end of the previous session. The rise was $ 1.56 from the last trade, when it closed at $ 39.68.
The price of the barrel rebounded on a day when the market was awaiting the result of the US elections. A victory for Democrat Joe Biden, analysts argue, could change some aspects of the US energy market and, in the international context, ease the pressure on Iran and allow its crude oil exports to rise.
Meanwhile, in New York, Texas Intermediate Oil Price (WTI) closed Wednesday with a 4 percent rise to $ 39.15 a barrel, driven by the weekly decline in crude oil reserves and against the backdrop of the presidential elections held in the United States. The increase from the session on Tuesday was $ 1.49 a barrel, leading to three consecutive days of gains after seeing massive sales last week on fears of the second wave of covid-19.
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ECONOMICS AND BUSINESS
WITH AFP AND EFE
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