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Summary
- Counting of votes for the 2020 US presidential elections began on Tuesday, November 3.
- The anticipation of a clear winner at the end of the counting saw stock markets in North America rally on Tuesday.
- Trump has suggested that he would challenge the ballots in the US Supreme Court in case of a loss.
The counting day for the US presidential elections 2020 is here and so far, the competition between President Donald Trump and Democrat candidate Joe Biden has been red hot. Biden, on whose favor most polls had been, is leading 224 states at the time of writing this article.
The anticipation ahead of the counting of votes saw North American stock markets bounce back from the October-end lows on Monday. Many analysts have suggested that rally in the stock markets is coming in the hopes of a “clear winner” at the end of the counting.
During the election campaigns, Trump had suggested that he would challenge the ballots in the US Supreme Court in case of a loss, a fact he reiterated again in the wee hours of Wednesday. If this happens, the hope of a clear winner will be pushed back by a dragged process of court cases and recounting of votes.
North American Stock Markets’ Stand
The S&P/TSX composite index climbed about 1.5 per cent on Tuesday, November 3. Since falling to a low of 15,586.57 last Wednesday, on October 28, the index rose over two per cent in a week. The broad composite currently records a decline of 6.59 per cent year-to-date (YTD).
The S&P 500 index was up nearly two per cent, while the Nasdaq composite jumped 1.85 per cent on Tuesday.
YTD chart of the S&P 500 index (Source: EODHD/Others/Thompson and Reuters)
The New York Stock Exchange climbed about 1.69 per cent, and the Dow Jones Industrial Average registered an increase of around two per cent on November 3.
The optimism of a clear winner at the end of the US elections counting day also saw the Canadian dollar record a near two-week high against the US dollar on Tuesday.
While future market fluctuations are influenced by multiple factors and nearly impossible to comment on ahead of time, some market experts believe that volatility should decrease once a clear result of the US presidential elections is out.
What Will Be The Impact On Stock Markets If Results Drag On?
If a clear outcome of the elections is delayed, past experiences show that the stock market could face an impact.
Back during the 2000 US presidential elections, the election process was dragged on for five weeks before former president George W Bush came to power in the White House, following a Supreme Court decision. This delay of the results weighed down on the US stock markets, with some exchanges doffing about 8.5 per cent, before quickly recovering after results announcement.
How Are Different Sectors Reacting To The US Elections?
Almost every sector on the Toronto Stock Exchange (TSX) posted a jump on November 3. The energy sector climbed nearly two per cent, while the financial sector jumped 2.3 per cent on Tuesday
The health care sector registered a fall on the Toronto Stock Exchange (TSX) on Tuesday. However, this comes after the over six per cent drop in the share value of Bausch Health Companies, which posted its latest quarterly results on Monday.
The TSX information technology index recorded a spike of nearly three per cent on Tuesday, following a sharp fall in value around October-end. The industrials sector also shot up 1.65 per cent on the counting day.
Democrats coming to power in the White House will bring federal legalization of recreational cannabis and a rise in clean energy and technology initiatives. Trump’s Republican administration returning to the Oval Office, on the other hand, would be welcomed by oil and gas producers. Either ways, there is gain and loss for the stock markets following the US presidential elections.
