According to the latest news reports the very polls that showed Trump ahead in the 2016 election run in are now showing Biden ahead.
With the coronavirus pandemic impacting on the voting methodology this time round, there has already been an early vote surge with well over 70 million Americans having cast their vote by post - which is more than half the total turnout of the 2016 ballot, so it looks like it could be a record-breaking ballot turnout.
It has also been recorded that the majority of these votes have been from Democratic supporters, wanting to get their say in safely, surely and early.
Meanwhile, on this side of the Atlantic, the FTSE 100 has fallen to its lowest level in six months as financial markets react to surging coronavirus infections across large parts of the world, and further across Europe the CAC and the DAX aren’t faring any better.
But the question was – ‘Joe Biden victory: which consequences for the markets?’
With the early turnout voters it seems that the USA has been gripped by a strong combination of pandemic panic simultaneously with election fever. This is not surprising in a country where the statistics for coronavirus deaths has topped 200,000; big question marks have been raised over the current administration’s handling of the pandemic.
The volatility of the markets, and the influence thereof by political events, was underlined on 2nd October when it was announced that the President and the First Lady had both tested positive for Covid-19. Inevitably this caused great concern for investors and there was an immediate dip in the markets, which later slowly rallied. So inevitably the volatility will continue through this election period until a firm steer is indicated as to where America is headed and under which political persuasion.
So right now you need to be aware of the best way to mitigate your risks even on this side of the ocean. British investors in the international markets with any foreign holdings focussed in the USA should consider themselves exposed and prone to loss.
It’s not just a simplistic case of which candidate or which party wins – of equal concern and effect on subsequent markets is the degree of the victory and who will hold the future ground in the Senate ( currently controlled by a Republican majority ) and Congress (currently dominated by the Democrats) . Believe it or not if the control is spread evenly between the parties that can spell bad news for investors as then there is no certainty over the approval of any future stimulus packages.
After the 2016 election we witnessed a rise in US equities as a result of Trump’s early tax cuts –similarly if we see a double house majority, in both the Senate and Congress, with a win for Biden then we could see the opposite effect of increased regulation on business and higher taxes which could be a bad omen for shares.
So maybe now would be a good time for you to check out your US exposure margins!