The US stock market rebounded as the projected landslide election victory for the Democrats failed to materialise. Tradefair brings you the latest financial market news...
"The thinking in the markets ... is it looks like it's divided government regardless of who takes the White House."
- FHN Financial chief economist Chris Low
The US went to the ballot boxes for election day on Tuesday (November 3), but the landslide victory for Democratic candidate Joe Biden suggested by the polls failed to come to fruition.
Instead, uncertainty over which candidate will win the White House still prevails. Biden and current US president Donald Trump are almost neck and neck in the remaining swing states - and the nation's stock markets have soared as a result.
Shares rally amid possibility of Capitol Hill stalemate
After a brief dive on Tuesday night when it was thought Trump may emerge victorious, stocks rallied and US financial markets recorded strong gains.
Particularly successful were technology and healthcare companies, amid speculation that stronger regulations against them having a monopoly on their markets may now not be brought in.
Facebook saw its shares rise by 8%, Amazon and Alphabet (owners of Google) gained around 6% and Apple climbed 4%.
Shares in defence contractors Northrop Grumman and Lockheed Martin also increased as potential cuts in military spending seemed less likely.
However, banks including Citi and JP Morgan turned lower, as did prices for gold and oil.
The most up-to-date figures show the Dow Jones Industrial Average closed up more than 1.3% and the S&P 500 climbed 2.2%, marking their biggest gains in a single post-election day in at least 40 years.
Meanwhile, the Nasdaq gained almost 3.9% thanks to its tech-heavy focus, with futures showing the index rising by 2.2%.
Investors were betting the close nature of the presidential race made factors like Biden's increase in corporate tax rates unlikely.
Essentially, the lack of a so-called 'blue wave' (a Democratic whitewash) means Trump's Republicans retain a majority of control in the US Senate.
"The thinking in the markets ... is it looks like it's divided government regardless of who takes the White House. That means a lot less probability of big sweeping legislative change, big sweeping spending or tax programmes and therefore a lot less uncertainty," said chief economist at FHN Financial Chris Low in a note to BBC News.
George Pearkes of Bespoke Investment Group agreed, telling Bloomberg: "There will be very little cooperation on fiscal policy, policy related to containing COVID, very little cooperation on infrastructure, or basically anything that will stimulate the economy. If that's the case, then what we've got is a repeat of the last recovery, almost to the letter."
Should the current trajectory continue, the Republicans would keep the Senate, while the Democrats would hold a slender majority in the House of Representatives. This should mean any large-scale legislative changes will be difficult to pass, while existing major economic policies (besides COVID relief) are likely to become law.
Hodges Capital Management's Gary Bradshaw told Reuters the markets favour gridlock, adding: "We are not likely to see big tax increases, and not a lot of regulation."
The race to the White House
It had at one point seemed as though Trump might claim an unlikely quick victory in the election, although this was soon found not to be the case. The president subsequently took to Twitter to lash out against what he claimed were fraudulent actions in the postal ballots, going on to demand recounts in some states.
He has already filed lawsuits in Pennsylvania, Michigan and Georgia to demand better access for observers to check where ballots are being processed and to raise concerns about absentee ballots.
Meanwhile, with wins in the major swing states of Wisconsin and Michigan, Biden's slim gains elsewhere may be enough to win him the presidency.
He is already leading in Arizona, once a Republican stronghold, and a win there and in Nevada would ensure the minimum 270 Electoral College votes necessary to make him the 46th president of the United States.
Currently, Biden is only six away from this benchmark, with Pennsylvania, Georgia, Nevada and North Carolina still to be counted.
Trump is behind on 214 Electoral College votes and will have to win in all the outstanding states - or succeed in his legal action - if he is to retain his position.
Reaction from the world markets
There were similar upward trends in stock markets elsewhere in the world to those seen in the US, although they also recorded the brief sharp declines that had analysts and investors up all night following Trump's premature victory speech.
The Stoxx 600 gained 0.6%, Germany's Dax rose 0.8%, and the FTSE 100 climbed 0.1%, having been stilted by the effects of England's latest lockdown coming into effect this week.
Asian markets also increased, with the Hang Seng in Hong Kong gaining 3.3% and the Nikkei 225 in Japan climbing 1.7%.
We may have to wait until the end of the working week before the outcome of the US election is known, but that is something Francois Savary of Prime Partners told Reuters wouldn't be a problem.
"Markets can live with either candidate. The scenario they don't want are legal problems over the outcome and significant political unrest," he pointed out.
With turmoil over COVID-19 still ongoing, analysts and investors may be hoping for a decision from Capitol Hill before too long - and for that political stalemate to keep things from changing regulation and legislation too much.
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