Risk Assets Likely To Be Profiting After The U.S. Presidential Election

In the US, the presidential elections are a few hours away from being held, and market volatility is rising. Democratic nominee Joe Biden was 10 points ahead of Republican nominee Donald Trump in the polls, giving Biden a big lead in the victory.

But, let’s not forget, the sudden win of Trump over Democratic nominee Clinton and Brexit in 2016 which showed what can’t be celebrated in advance.

These elections may be the most electoral in U.S. history, and today more than 93 million Americans have cast their ballots, continuing to show their historical political favoritism in the vast majority of state voters. So the better answer would be the votes of undecided voters, where Biden shows a small advantage.

The Democratic nominee leads the polls in 21 states (in 18 by more than 10 points and in 3 by between 5 and 10 points), and will add 233 voters. On the other hand the Republican nominee leads in 20 states (14 by more than 10 points and 6 by between 5 and 10 points), and will add 126 voters. The gaps are less than 5 points or between 5 and 10 in the remaining 10 states, totaling 179 voters, but these are the districts where there was too much margin of error in the 2016 polls.

When selecting their favorite, the U.S. markets show mixed emotions, because Biden’s win would cause higher and new taxes, something not well seen by the business sector. Although, on the other hand, the Democratic Party will accept a broader stimulus package to help the recovery of the American economy and offer greater foreign policy stability that would give investors trust in the medium term.

Trump’s unexpected win will not be frowned upon by the markets, as his path has restored momentum to the U.S. economy, the securities markets have held at record highs. But the big questions on how he treated foreign policy and the COVID-19 pandemic may be crucial to the swing states’ decision to cast their ballots.

On election day, a strong victory by either of the candidates can boost risky assets.

It would create too much confusion and volatility if closed results were to be presented. Parties would request appeals and legal disputes to obtain new voting counts, so investors focused on such uncertainty would seek safe haven assets by giving the greenback greater impetus.

Keeping an eye on the evolution of the Dollar Index that will try to break the next resistance by 94.74 and now look for the next level at 95.72, since a bearish move will look for 92.52 supports and then hit the minimum range of 91.77 touched on September 1, 2020.