Stock markets gripped by US election race – as it happened

Graeme Wearden

from on 2020-11-04 21:32 (#59Y40)

Rolling coverage of the latest economic and financial news

In the UK:

UK double-dip recession looms
Job cuts at Lloyds and John Lewis

9.46pm GMT

9.32pm GMT

And finally.... Wall Street has closed for the night, with a very solid rally after Election Day.

I will work as hard for those who didn't vote for me as I will for those who did vote for me.

8.48pm GMT

Our financial editor, Nils Pratley, says investors should be wary of celebrating the election -- especially as we don't have a result yet!

It's rarely wise to read too much into financial markets' snap reaction to a US presidential race, especially when investors are responding before the result is known for certain.

Back in 2016, remember, a victory for Trump was meant to be terrible for share prices but the US stock market surged.

7.59pm GMT

One hour to go on Wall Street....and the Dow is still 2% higher.

It's now trading at 28,056 points, a 576-point gain today.

U.S. stocks surged on Wednesday aU.S. stocks surged on Wednesday as the race for the White House remained undecided and the likelihood of gridlock in Congress gave investors optimism that major policy changes would be hard to enact.

Both President Donald Trump and Democratic nominee Joe Biden still had paths to reach the 270 Electoral College votes needed to win as states kept counting mail-in ballots.

7.55pm GMT

Away from the US election, it was a grim day for UK job losses.

I flagged earlier that department store group John Lewis and bank Lloyds both announced hefty job cuts (1,500 and 1,070 respectively). They've been followed by footwear retailer Clarks (700 jobs) and the airline caterer Do & Co (1,068), as the Covid-19 crisis continues to push up unemployment.

7.39pm GMT

Today's Wall Street rally shows that investors aren't panicking about the prospect of a divided government, yet anyway....

Here's Associated Presss take:

Markets are focusing just as much on control of the Senate, where prospects for a Democratic takeover appear to be dropping after Republicans held onto seats considered vulnerable.

That in turn lowered the prospects for the tax increases and tighter regulations on businesses that investors saw coming in a potential Democratic sweep, even if it also hurts the likelihood of a big stimulus effort for the economy.

7.36pm GMT

Marketwatch reports that the Dow is on track for its biggest post-election day rally in 120 years.

The Dow is on pace for its strongest post-Election Day rally in 120 years https://t.co/0fyCKjccS0 pic.twitter.com/iXjxTCeYGL

7.29pm GMT

The presidential race has taken another step, with Joe Biden winning Wisconsin (Associated Press and CNN both called it a few minutes ago).

Latest developments here:

7.05pm GMT

With two hours trading left in New York, the Dow has dipped back slightly.

But it's still showing solid gains - currently up 647 points or 2.35% at 28,127 points.

6.55pm GMT

Here's our news story on the slowdown in Britain's service sector last month, which makes a double-dip recession look increasingly likely....

6.25pm GMT

Guy Foster, head of research at wealth manager Brewin Dolphin, predicts any future stimulus package agreed by Congress would be smaller than the Democrats would really like:

The fate of the next president's major policies depends on control of Congress. It now appears unlikely that the Democrats will win control of the Senate, leaving them unable to push through significant Covid-19 coronavirus stimulus packages or tax reforms, which is positive news for growth stocks. There is still likely to be some fiscal stimulus ahead but it will probably be a smaller package than if the Democrats were to control the Senate.

There may be plenty of fluctuations, as the market seeks to predict who will be the winner. However, bear in mind that, at present, the market has wider concerns, and remains focused on the development of a vaccine, which will be increasingly vital if there looks likely to be no further stimulus.

5.59pm GMT

The S&P 500 index is now up over 3.4% today, as the rally continues.

Bloomberg's Sarah Ponczek reports that it's the strongest gain straight after a presidential election ever:

If I told you yesterday that there would be no blue wave, and results would be delayed, would you have believed that today would see the best first-day S&P 500 gain EVER after a presidential vote?

h/t @luwangnyc pic.twitter.com/OM1zm7JyWe

5.55pm GMT

Mitch McConnell's supportive comments about a possible new Covid-19 stimulus package are helping shares to rally even higher on Wall Street.

Markets are reaching highs of the day. The S&P is up over 3% and got additional boost after Mitch McConnell said a stimulus bill is possible before the end of the year https://t.co/0QL8RrLkCH pic.twitter.com/ydoBJD2ZrE

5.31pm GMT

On the issue of stimulus packages.... US Senate Majority Leader Mitch McConnell has said Congress needed to approve a new coronavirus aid bill by the end of 2020.

Reuters has the story:

Saying he hoped that partisanship over such a stimulus bill will subside with voting for president and members of Congress over, McConnell said there was a need to do it by the end of the year." He also noted the possibility" that such a bill will do more for state and local governments," a key Democratic demand.

On Oct. 30, McConnell said in an interview with conservative radio show host Hugh Hewitt that such an aid bill should be done at the beginning of 2021. McConnell, the top Republican in Congress, did not say why he was now accelerating that timetable.

McConnell on stimulus: I think we need to do it and I think we need to do it before the end of the year." He called it a top priority" and also raised the possibility" that such a relief package could include said to state and local governments.

5.30pm GMT

Back in New York, shares are pushing even higher as the election race continues to grip investors.

The Dow Jones industrial average is now up 715 points, or 2.6%, while the Nasdaq is now over 4% higher.

5.13pm GMT

Rupert Harrison of BlackRock has tweeted that America could face at least two years of gridlock and obstructionism, as the Democrats seem unlikely to win the Senate.

So if a new fiscal package can't be agreed, responsibility for stimulating growth could fall back to the US Federal Reserve, he adds:

No big legislation. No big fiscal support for the economy. The Fed is back to being the only game in town.

5.08pm GMT

All Europe's stock markets ended the day higher, with strong gains in Frankfurt (+1.95%) and Paris (+2.4%) as well as London.

The whipsawing we've seen in markets has been fascinating from the moment that Trump declared victory in the early hours, just before the European open. Europe is poised to end strongly, as the odds on a Biden victory increase and investors seemingly begin to price out a harmful legal challenge that will generate enormous uncertainty at the worst possible time.

It may be a little premature to write off a Trump challenge given the unbelievable events of today but investors are looking as comfortable as they have at any point. It's interesting that, despite the threat of Supreme Court challenges, at no point have we seen any real panic in the markets. There was some downside but it wasn't severe. Investors have very much taken today in their stride.

4.51pm GMT

After starting the session with a sharp fall, the UK's FTSE 100 index has closed nearly 1.7% higher at 5883 points, a gain of 96 points today.

That's its highest closing level in two weeks.

Dealers have gotten over the initially political uncertainty and the bullish sentiment from earlier in the week is in play.

4.31pm GMT

Morgan Stanley says investors should take three lessons from the US election:

1) Focus on policy paths from divided' government. That's because the chances of the Democrats taking control of the Senate seem to be waning

While Democrats maintain a path to the White House, the path to Senate control could close this week. Current vote counts in the Maine Senate race favor Republican Susan Collins.

If she continues to hold above 50% of the vote, she would avoid a subsequent count under the state's rank-choice voting system. If this occurred, the path for Democratic Senate control would be very narrow, effectively relying on winning a race in NC [North Carolina] they are behind in as well as a runoff race in GA [Georgia].

Republicans firmly oppose increasing taxes. The Tax Cuts and Jobs Act (TCJA) was lauded by the party as a key achievement. It stands to reason that defensing the policy would be a priority. Hence, Democrats controlling the White House, Senate,and House of Representatives is likely a necessary condition for tax increases.

4.11pm GMT

Although the markets are now rallying, the US election hasn't yet delivered the decisive result that investors tend to favour on these occasions

Kevin Boscher, chief investment officer at Ravenscroft, fears that prolonged uncertainty would be bad news for the US and global economies.

The best case for Biden is that he manages to squeeze a narrow win in some of the undeclared Midwest States, getting him to the crucial 270 electoral votes needed for victory. However, even in this scenario, the Republicans would probably end up holding the Senate, making it more difficult for Biden to pass some of his more controversial and favoured policies including an aggressive infrastructure and green" investment package and tax increases. If Trump wins, he would still face a House of Representatives controlled by the Democrats and perhaps a reduced majority in the Senate.

Given the stalemate, the prospects of a near-term fiscal deal have reduced at the same time as a renewed surge in Covid-19 cases across Europe and the US is causing considerable concern. This combination threatens the global economic recovery, increases the risk of a deeper correction for equities and generally leads to a more uncertain outlook. The potential for civil unrest and a damaging political and legal dispute adds to these concerns.

3.51pm GMT

Wall Street is holding those early gains, currently up 522 points or 1.9% at 28,002.

The Dow is up as much as 500 points just 1 hour after the opening bell, even as no winner of the presidential election has been announced. https://t.co/8L30fvC6vM pic.twitter.com/2XM7V0wIrp

3.34pm GMT

Stock markets on both sides of the Atlantic are now pushing higher, as election fever continues to grip investors.

The Dow Jones industrial average is now 2% higher, while the tech stock rally has pushed the Nasdaq up by 3.5%.

We believe we are in a clear path to victory by this afternoon, we expect that the vice president will have leads in states that put him over 270 electoral votes today.

The vice president will garner more votes than any presidential candidate in history, and we're still counting. He has won over 50% of the popular vote. We are on track to win in Michigan by more than Donald Trump did in 2016. To win in Wisconsin by more than Trump did in 2016. To win in Pennsylvania by more than Trump did in 2016. And we flipped one of his states, Arizona.

3.14pm GMT

Salesforce.com and Microsoft are also among the Dow risers, up 3.5% each, have both gained 3%, while Apple is 2.5% higher.

A divided Congress could mean less chance of imposing tighter regulations on the tech sector, as well as limiting the prospect of reversing Donald Trump's tax cuts.

Defensive growth stocks in the large-cap technology sector could continue their outperformance against a backdrop of stable yields and a lesser threat from the higher taxes and tighter regulation a Democratic sweep might have introduced.

3.13pm GMT

Healthcare companies are among the Wall Street risers, while banks and mining companies are down.

That's much the same picture as we've seen in London today.

2.42pm GMT

After a dramatic evening, and perhaps not too much sleep, the US stock market is open.

And the main indices have pushed higher in early trading, led by tech companies, with the election still in the balance.

For the first time, AP's running vote tally now shows Biden ahead in Michigan pic.twitter.com/K1Fr9RR7Nr

2.12pm GMT

With less than 30 minutes until Wall Street opens, European markets are now rallying more strongly.

The main indices are at fresh one-week highs:

The result of the election is still unknown and looks like that may remain the case well into today in the U.S. time zones. The chief uncertainty is the last portion of the counts in states like Wisconsin, Michigan and Pennsylvania, the three key states that were the difference for Trump in 2016. Late mail-in votes there tilt Democratic and are still keeping a sense of suspense, as is the tight situation in Nevada.

To make the situation even more fraught, U.S. President Trump was out speaking in the middle of the night in the U.S. and essentially declared victory and asked the Supreme Court to stop the counting, a shocking turn of events.

1.40pm GMT

Just in: America created fewer private sector jobs than expected last month, indicating that the economy slowed.

Company payrolls only expanded by 365,000 jobs in October, according to the ADP National Employment Report.

Oof. Today's @ADP employment report finds that the economy recovered only a tiny number of jobs in October-a dramatic slowdown in the jobs recovery. https://t.co/s3XISofepc pic.twitter.com/4WNb2ZW8Qv

1.27pm GMT

Interestingly, Wall Street's fear index has dropped today.

The CBOE Volatility Index, or VIX, which measures stability (or otherwise) in the US stock market has fallen by over 13% today, to its lowest level in over a week.

The VIX is plunging https://t.co/vpvyWS55J9 pic.twitter.com/ONfHsg2OLp

1.14pm GMT

Our latest US election liveblog has a handy explanation of the situation in the US election right now:

Paths to victory remain in the US presidential race for both Donald Trump and Joe Biden, but Biden has more ways to win and appears to be running stronger state-to-state based on the places - cities, mainly - where large absentee votes have yet to be counted.

1.08pm GMT

Uncertainty is the theme of the day in the markets, as the election race rumbles on.

Asset management firm Unigestion say we've gone from a Blue Wave' to a Nail-Biter', in less than a day.... and we might not stop nervously chewing our fingertips for some time:

Heading into Election Day, markets were pricing a high likelihood of a strong Democrat sweep that would usher in major stimulus early next year, benefiting primarily US equities but also other growth-oriented assets. However, the results so far are much murkier. Currently, neither President Trump nor former Vice President Joe Biden have won enough electoral votes to legitimately claim victory, while control of the US Senate remains unclear (Democrats held on to the House of Representatives, which was wholly expected).

Uncertainty will thus remain over the next few days, if not longer. Results for the presidential election from key swing states such as Michigan and Wisconsin are expected tomorrow, but the crucial state of Pennsylvania will likely not have its final tallies until the end of the week. Moreover, Trump's news conference laid open the prospect of litigation and Supreme Court involvement, which adds additional layers of uncertainty.

12.57pm GMT

US technology stocks are still expected to rally when the New York stock exchange opens, in around 90 minutes.

The Nasdaq is up over 2.7% in pre-market trading. Tech giants Apple, Amazon, Alphabet, Facebook and Microsoft are all being called higher.

FANG+ Constituents$AAPL 113.59 +2.85%$AMZN 3122.9 +2.46%$BABA 290.75 +1.81%$BIDU 137.81 +2.89%$FB 272.81 +2.86%$GOOG 1698 +2.96%$NFLX 502.45 +3.14%$NVDA 536.45 +2.99%$TSLA 434.02 +2.38%$TWTR 42.91 +2.8%$MSFT 212.55 +2.94%

The outcome of the Senate race greatly reduces the likelihood of abrupt change in tax and regulations, which could have put pressure on financials, energy, pharma and tech.

Similarly, the prospect of a much smaller fiscal boost under a split Congress may induce a slower rotation from Growth to Value (financials in particular) and Cyclicals, or from the US and Nasdaq to ex-US indices, Europe above all.

12.37pm GMT

After a very choppy, and rather nervous morning, European stock markets have now pushed a little higher.

There aren't any major moves - but the London, Paris, and Frankfurt bourses are all showing gains, with the US election yet to deliver a winner.

12.36pm GMT

More unemployment bad news, this time from the John Lewis Partnership.

The group is cutting 1,500 head office jobs as part of efforts to make 300m in annual cost savings and return to profitability.

Its finance director, Patrick Lewis, the great grandson of John Lewis's founder and the only family member still working for the business, is to exit the department store and Waitrose group after 26 years as part of the changes.

Lewis will be replaced by Berangere Michel, the director of customer service. Her duties will switch to Pippa Wicks, the head of the John Lewis department stores, and James Bailey, the boss of Waitrose, as the group trims down its executive team.

12.12pm GMT

Lloyds Banking Group has unveiled a further 1,070 job cuts less than a week after it reported better-than-expected profits on the back of a UK mortgage boom.

LBG has produced better than expected Q3 results, posting in excess of 1 billion of pre-tax profit - a direct result of the hard work and versatility of its workforce. This cost cutting strategy will not serve the bank or its customers. It is impossible to reconcile the job losses announced today with such an improved balance sheet."

These changes reflect our ongoing plans to continue to meet our customers' changing needs and make parts of our business simpler...

We will help colleagues who are affected find new roles and redeployment opportunities wherever possible and everyone will be given access to a package of training and support designed to help them secure their next position, whether within or outside of our business.

11.40am GMT

Back in the currency markets, the pound is recovering some of its earlier losses as the nail-biting US election race continues.

Sterling has nudged back to the $1.30 mark - roughly where it was trading 24 hours ago.

The world, the markets, and investors wait on tenterhooks this morning, as the US election heads for a tight result.

Fresh in the collective memory is the chaos of 2000 and closeness of 2016, and as Biden's blue wave struggles to meet expected momentum, it looks as though the US election will continue to play on throughout this week.

11.14am GMT

Here's our economics editor, Larry Elliott, on the financial market reaction to the US election race:

Investors retreated into the safe haven of the dollar and US treasury bonds as financial markets were rattled by uncertainty over whether Donald Trump or Joe Biden had won the race for the White House.

The dollar rose by 1% against a basket of global currencies and there was strong buying of US government bonds as the mood turned cautious.

11.11am GMT

While all eyes are on the US election, the UK economy appears to be heading into a double-dip recession.

Purchasing managers at British service sector companies have reported that growth slowed sharply in October, with new work actually falling for the first time since June.

October data indicates that the UK service sector was close to stalling even before the announcement of lockdown 2 in England, with tighter restrictions on hospitality, travel and leisure leading to a slump in demand for consumer-facing businesses.

This was only partly offset by sustained expansion in areas related to digital services, business-to-business sales and housing market transactions. The service sector as a whole recorded its slowest output growth since June, while new orders declined for the first time in four months.

10.47am GMT

European markets are now dipping back again, following reports that Joe Biden now has a narrow lead in Wisconsin (which has 10 electoral college votes).

The race for Nevada (and its six votes) is also tight.

The race currently stands at 238 electoral votes for Biden to 213 for Trump, with six battleground states outstanding.

If Biden can hang on to a narrow lead in Nevada, and seal the deal in Wisconsin, a win in Georgia (16 electoral votes), Michigan (16) or Pennsylvania (20) - brings him victory. North Carolina, with 15 electoral votes, is also still out.

US election 2020 live: Biden holds narrow lead over Trump in Wisconsin as result awaited https://t.co/QwFYkfPEJo

10.08am GMT

The US futures market is currently signalling that the tech-focused Nasdaq index will surge by around 3%, when trading resumes in four and a half hours.

*DOW FUTURES UP 0.2%
*S&P 500 FUTURES UP 1%
*NASDAQ FUTURES UP 3%$DIA $SPY $QQQ pic.twitter.com/AxXFuv8CpF

9.43am GMT

Stocks are now turning higher in Europe, as investors digest the situation.

The FTSE 100's now up 35 points, or 0.6%, to a new one-week high of 5828 points.

The result of the US election is still uncertain but the Biden reflation trade', which had been increasingly priced in by markets, is already starting to unwind as investors reassess risk.

Markets had been set up for a decisive victory for Biden and the Democrats. Many investors had been long commodities, short US dollar, and short US Treasuries in the hope that higher fiscal stimulus under a unified Democratic presidency and Congress would fuel growth and reflation.

9.31am GMT

Here are the best and worst-performing sectors on the FTSE 100 this morning, as investors react to the US election.

With Donald Trump already claiming victory even though millions of votes are still uncounted, investors may have to belt up and brace themselves for some volatile sessions of trading ahead.

So far, as trading has got underway in Europe, investors seem to be adopting a wait and see approach, as it is likely to be many hours and possibly days before all states tally all the ballots. With a high number more votes cast this year, and many more by mail because of the coronavirus, the process could be long and protracted.

8.54am GMT

You can keep track of the situation in the US election here:

8.46am GMT

The pound isn't the only currency struggling against the US dollar.

The greenback has strengthened against a basket of currencies today, as America's election race tightened.

The dollar was up 1% as European markets opened, while the offshore-traded yuan, Australian dollar and Norwegian crown, which have for years borne the brunt of Trump's protectionist policies, weakened.

One of the few things clear so far is that we are not going to see a Democrat landslide win as polls had suggested. That has wrong-footed an FX market which was positioned for some clarity," said Chris Turner, global head of markets at ING.

Chinese yuan coming back... off less than half a percent now pic.twitter.com/SCAtPEyfox

8.35am GMT

After lurching lower at the start of trading, the FTSE 100 index of UK shares is now back where it ended on Tuesday:

The election is much closer than many pundits expected, with Trump holding key battleground states including Texas, and a clear and quick result is looking less and less likely.

It's the worst outcome for markets, with futures jumping around as traders switch their trades to try and reflect the shifting sentiment towards the candidates, and we expect volatility to be high today. Investors may have to endure some vicious swings for the next few days if this drags on, and it has echoes of 2000 about it, when the result of George Bush Jnr versus Al Gore was too close to call.

8.22am GMT

European markets opened in the red, as traders watch the election drama across the Atlantic.

In London, the FTSE 100 dropped by 61 points or around 1%, but is now recovering some ground.

Dax -1.91%, Cac -1.28%, FTSE -1.05% and Sterling slumps 1% versus Dollar. Weak market open in Europe #USElection2020

8.17am GMT

The pound has fallen sharply against the US dollar this morning.

Sterling has lost nearly a cent and a half to $1.291, handing back all yesterday's gains.

The Pound is literally sinking against the dollar this morning, as the outcome of US elections is still on a knife-edge

GBPUSD 1.2938 -0.0120 -0.92%@graemewearden

The dollar saw wild swings along with other macro markets last night after Donald Trump's unexpectedly strong performance in key swing states, notably Florida. Prior to the first results becoming available, markets were happily assuming that a clear Biden and Democrat win would lead to large stimulus spending, a higher path for inflation, and a weaker dollar.

This narrative was blown to pieces by early results from Florida, causing the dollar to suddenly rally along with a sharp flattening in the US yield curve as investors hastily recalibrated their bets. Markets must now grapple with a close election and the prospect of sustained uncertainty stemming from long vote counts and an impending court battle over the validity of mail-in ballots.

8.08am GMT

Both presidential candidates have been speaking about the race.

President Trump tried to claim victory, even though counting continues.

Donald Trump pushed a baseless accusation of fraud" in the presidential election, as he declared victory without the results to back that up.

This is a fraud on the American public," the president said a the White House. This is an embarrassment to our country."

We are feeling good about where we are. I am here to tell you tonight that we are on track to win this election.

We know with unprecedented early voting, it is going to take a while. We are gonna have to be patient."

8.01am GMT

US government bond prices have rallied sharply overnight, as hopes of an early stimulus package faded.

Yesterday, the yield (or interest rate) on US 10-year Treasury bills jumped to four-month highs.

The market is now less convinced about a #Biden win. 10-year Treasury yields broke their resistance line to touch 94bps to fall by 14bps as #Trump won some key states. Uncertainty might play against some large short Treasury positions, pushing yields further down. @SaxoStrats pic.twitter.com/2anT7HJEwP

US 10-year Treasury #yield doesn't like this very much. Down a full 10 basis points as the #USElections2020 outcome still very uncertain. pic.twitter.com/CgJr9zRpsf

At this stage, no clear winner in the US Presidential election has been declared. Once again, the polls have underestimated the depth of support for Donald Trump and it is possible he may well end up as the winner.

In the short term, this is disappointing for markets and raises the prospect of several days or even weeks of uncertainty and possible legal challenges. Investors had been also been hoping that a clear victory would open the door to a massive stimulus package which would boost the US economy. This now appears unlikely, at least in the short-term, so we would expect to see some volatility today as markets digest the situation.

7.33am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Investors around the world are gripped by the unfolding election drama in the US.

Biden is called to win Arizona (11), which leaves the key Rust Belt states of Wisconsin (10), Michigan (16) and Pennsylvania to decide the election.

But these won't be called imminently and it could take days to decide final outcome, not even considering legal challenges prolonging the agony - A result today may not be possible, though if Biden clears 270 it seems difficult for Trump to mount a serious legal challenge.

***Revised European Opening Calls*** :#FTSE 5671 -2.00%#DAX 11817 -2.25%#CAC 4697 -2.26%#AEX 546 -1.55%#MIB 18573 -2.18%#IBEX 6569 -2.70%#OMX 1738 -1.92%#STOXX 3024 -2.42%#IGOpeningCall

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/