Wall Street makes gains as US election outcome hangs in balance
European shares close higher after volatile start to trading
Wall Street stocks rose in early trading despite the absence of a clear result from the US presidential election. The Dow Jones was up about 2.3 per cent and the S&P 500 was 2.9 per cent higher shortly before 5pm Irish time, while the tech-heavy Nasdaq surged 4.7 per cent.
The gains arrived despite fears of a drawn-out and potentially contested US election result. Both Trump and Biden claimed they were on course for victory after results for a majority of states were called. Trump went further, claiming falsely that the election was being “stolen” from him with millions of votes still uncounted.
Investors have said they favour a definitive, fast resolution to the election as that would clear the way for a deal on a stimulus package to help the damaged US economy. Analysts have also said the market will be comfortable with a clear Trump victory.
After a choppy start to trading, European shares closed higher, meanwhile, with the benchmark Stoxx 600 index finishing up 2 per cent and the Iseq in Dublin ending 0.7 per cent higher.
In the US, shares of technology mega-caps including Apple, Amazon.com and Nvidia Corp surged more than 2 per cent in premarket trading with some investors pointing to a lower threat of antitrust scrutiny for Big Tech under Trump than under a Biden presidency.
Some infrastructure, renewable energy and marijuana stocks, seen as likely winners from a Biden presidency, sank as much as 7 per cent.
“Generally, the Biden blue-wave train is favourable to mid-caps, cyclicals and stocks exposed to trade with emerging markets so people are having to move quickly back into the secular growth names and some of the traditional energy stocks,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management’s chief investment office in London.
Still, the prospect of political uncertainty also sent investors to US Treasuries, sparking the biggest one-day drop in 10- and 30-year bond yields since June. Shares of US banks, which typically track Treasury yields, slipped between 1.1 per cent and 2.5 per cent.
On election night in 2016, US futures plunged as Mr Trump pulled off an upset victory against Democrat Hillary Clinton. However, the next day marked the start of the so-called “Trump rally” that saw the S&P 500 jump 5 per cent in a month, fueled by promises of massive tax cuts and financial deregulation.
The S&P 500 has climbed about 57 per cent since Trump’s election in 2016, with the information technology index surging 149 per cent and energy tumbling 56 per cent, according to Datastream.