The Dow Jones[1], S&P 500[2] and Nasdaq[3] 100 experienced their best week since early April as the United States went to the polls to vote on a new government composition. Anti-risk currencies like the US Dollar[4] and Japanese Yen[5] declined as growth-linked ones like the Australian and New Zealand Dollars outperformed. Anti-fiat gold prices[6] gained as crude oil[7] rose cautiously.
Markets were initially thrown off by what was appearing to be a contested election. But as the counts came in, Democratic nominee Joe Biden began closing in on incumbent Donald Trump. On Friday, Mr Biden appeared to take the lead in key swing states Georgia and Pennsylvania. Some certainty likely boosted markets, overlooking what may be a smaller-than-expected fiscal package.
Trump has filed a lawsuit, contesting election votes for Joe Biden[8], bringing some uncertainty into financial markets as more votes will be tallied in the days ahead. The Senate race in Georgia is also heading for a runoff, meaning that the composition of the upper chamber likely won’t be known until at least early January.
A confirmed win for Joe Biden will likely be a major foreign policy shift[9] compared to the current administration, and emerging market assets are rallying. This is as the European Union is approaching the November 10th target date to impose WTO-approved tariffs against the United States worth about $4 billion. Trump has hinted at retaliation.
Rising coronavirus cases in the US and Europe are also a concern, with lockdowns having been recently introduced in the latter. This is denting global growth recovery expectations. Brexit talks are also continuing this week. The ECB is hosting a
