One of the most anticipated days for the markets, the Election has approached us in the midst of one of the most turbulent years in the past decade. It is important to note the critical factors that the markets look for and a general overview of the markets.
Earlier today, as Biden strongly lead the race, commodity and equity markets were up firmly as the likelihood of a contested election faded away. However, with Trump planning to contest the election results alongside Trump claiming that the Democrats are stealing the Election by allowing votes to be continued after the ballots close, a contested election has come back into question. Markets started to retreat, with the Dow Jones pushing lower.
As predicted, volatility has been rocking the futures market today. Particularly with Gold, a commodity that was expected to do relatively well amidst the volatility has taken on an equity-like behavior instead of being a "save haven."
Equity markets have swung back and forth, with the S&P 500 and the Dow Jones being up / down 1% during the day. A little bit more consistent, the NASDAQ has been up above 2% for most of the day as many investors and traders retreat to tech stocks as a "defensive" play. With that said, U.S. futures near the tail end of the night grinded lower with European equities trading in the negative territory.
Another consistent player in the Market has been the U.S. dollar, as investors and traders sell positions to hold the U.S. It has rallied on risk-off trades. However, it has remained relatively flat. If you take a look at the cable, it essentially mirrors the dollar index.
The Democrats hope for a blue sweep have all but gone as Donald Trump clinches Florida and Ohio, battleground states that Biden hoped to win. Fabiana Fedeli, global head of fundamental equities at Robeco, said that "The blue wave trade has been going on since summer and has built up more recently, and I would expect to unravel now." However, she does warn that trading the outcome "makes no sense."
We can clearly state that we do not know what's going to happen in the next couple of hours. However, as all is said and done, markets should return back to a relative normal. Stay put. Stay safe and Trade safe.