Amid the ongoing uncertainty regarding the election results, one thing is clear: “The Blue Wave has not materialized as the polls predicted.”
This has led to a mixed bag of consequences for the financial markets. Wayne Gordon, executive director for commodities and foreign exchange at UBS Global Wealth Management, told Bloomberg News that many investors had been counting on and expecting a Biden win which many equated with a large stimulus package on the way. That’s now in doubt – both if and when.
S&P 500 futures have been swinging between a gain of 2.1 percent and a loss of 1 percent overnight. “Nasdaq futures directly correlate with Trump winning,” Nader Naeimi, head of dynamic markets at AMP Capital Investors told Bloomberg. “And as a ‘Blue Sweep’ is looking less likely, tech is rallying.”
Meanwhile, Prices of gold, silver, and copper have all dropped, while oil prices have risen, along with the dollar.
“Oil has benefited from … the improvement in odds for Trump,” said Warren Patterson, head of commodities strategy at ING Bank NV, explaining that Trump’s hard-line stance against Iran and Venezuela, both major oil producers, is responsible for the gains here. Trump imposed harsh sanctions on both countries and also tightened global supplies.
If Biden wins, he is likely to impose stricter regulation on shale drilling that boosted U.S. oil production under Trump, and he’s also expected to fulfill his promise to renew the American agreement with Iran, leading to the lifting of sanctions and a huge rise in crude oil exports from that country.
All the same, “I would not leap to any big conclusions,” Cambiar Investors’ chief investment officer cautioned. “We all saw that in 2016, markets kind of did not get much right about the impact of the election in the initial hours after it was clear Trump would win.”
A Senate Democrat majority of more than 52 seats looks unlikely, he added. “That’s as much as I can see clearly … but it does look like a lot of (systematic) polling error again, which is an interesting story in and of itself.”