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Summary

• President Donald has vowed to challenge the election results in the US Supreme Court in case of a loss.
• As of the time of writing this article, Democrat Joe Biden was leading the 2020 US presidential elections race.
• Back in 2000, when the election results were delayed by about three weeks, stock markets registered a sharp fall.
• Prime Minister Justin Trudeau has said that in case of a “less clear result”, Canada will need to gear up for possible outcomes.

Long before the counting of votes for the 2020 US elections even began, President Donald Trump had promised that he would take the matter to the Supreme Court if majority of ballots didn’t lean his way. Now that counting shows Democrat candidate Joe Biden in the lead, anticipation around Trump’s old threat is rising.

Even as millions of votes remained uncounted in key states, Trump prematurely announced on Wednesday, November 4, that his party “had won”. While speaking to the press at the White House, Trump said that he would be heading to the Supreme Court demanding “all voting to stop”.

In a scenario where Trump challenges the election results in the Supreme Court, the entire process of having a clear winner of the 2020 US presidential elections will be delayed by court procedures and recounting of votes. And if history is to be believed, this dragged-on process could have a substantial impact on the stock markets.

Let’s rewind to the 2000 US presidential elections to understand this better.

When 2000 US Elections Results Were Stalled For Over A Month

It all began on November 7, 2000 – the counting day. The margins had remained close even as the counting of votes rolled into the night and it came down to the key state of Florida, which had a sufficient count of electoral votes to effectively sway the election on either side. Right off the bat, a number of news channels named Florida for then-Vice President and Democrat candidate Al Gore. However, as counting continued, the numbers quickly unraveled to show Republican and former Texas governor George W Bush in the lead for Florida.

When the first round of ballot-counting did not produce a clear winner for the 43^rd US presidency, the state of Florida went into a phase of recounting. And as this process stretched for weeks, well into December 2000, the stock markets in North America slumped.

Between 7 November 2000 and 12 December 2000 (when the US Supreme Court declared the results), the S&P 500 index registered a decline of over four per cent. The Dow Jones Industrial Average index fell nearly two per cent and the NASDAQ Composite plunged by about 14 per cent, while the Wilshire 5000 Total Market Index slumped over five per cent during this period. 

Chart of the S&P 500 index between 7 November 2000 and 12 December 2000 (Source: EODHD/Others/Thompson and Reuters)

Major events in the United States, including presidential elections, has a cascading effect on Canada. When the election results were delayed in 2000, the S&P/TSX Composite index slid by over two per cent between 7 November 2000 and 12 December 2000.

On the night of 12 December 2000, after a series of dramatic unfolding, the US Supreme Court declared George W Bush as the winner of the 2000 US presidential elections.

The stock markets began rebounding from their initial dip around the beginning of December 2000. Some sectors even registered a boost in the hopes of a Bush victory.

Would Stock Markets Droop If 2020 Election Results Are Delayed?

Uncertainties at home and international level have a track record in the modern world of impacting investor decisions.

In this year of coronavirus pandemic, markets have already witnessed massive bloodbath.

Some market analysts feel that if Trump brings in the Supreme Court to stretch out the election result process, the stock markets in North America could tank significantly.

However, investors should keep in mind the fact that predicting future stock market movements is near to impossible as there are more than a few factors that can influence fluctuations. In case of the 2000 US elections too, for example, stock markets began climbing even before a clear winner was announced by the Supreme Court.

Is Canada Ready For US Election Results?

Political commentators have noted that unlike the 2000 presidential elections, which did not witness any extensive unrest in the United States, there is apprehension around some level of violence breaking out this time around in case of a delayed result.

Prime Minister Justin Trudeau recently spoke regarding possible “disruptions” in the US, saying that though people are hoping for a clear result, his government is preparing for alternative scenarios. Deputy Prime Minister Chrystia Freeland, meanwhile, said whatever be the outcome, the 2020 US presidential elections “will be significant for Canada.”

Whether we find out the name of the next American president the next day or the next month, the importance of Canada-US relations is here to stay. So irrespective of whoever comes to power in the White House – and whenever – Canada will have keep its own interests in mind.