The markets today, Wednesday, viewed several hours before the opening bell, look to start on a negative note, with many major indicators in the red at time of writing.
(These indicators can change during the runup to the opening bell and at any time afterwards.)
Many indicators, already in the red, dipped further after the debate last night between incumbent President Donald Trump and challenger and former Vice President Joe Biden.
Not surprisingly, the debate focused on the range of issues constantly debated during the election campaign, including the American economy, the Trump administration’s response to the virus crisis, election integrity, and the Supreme Court controversy. The rancor between Trump and Biden, their trading of insults, combined with their talking-over of each other led Bloomberg to term the debate ‘Chaos in Cleveland’.
Still, notwithstanding the post-debate dip in some indicators, the debate will not have a lasting effect on the market, according to some analysts interviewed for a Reuters report. “The markets hadn’t had high hopes. The biggest takeaway was that Biden did not turn out to be ‘Sleepy Joe’, and dispelled concerns that he could not cope with debate and would reduce the chance of his winning,” said Masahiko Loo, portfolio manager at Alliance Bernstein in Tokyo. “So, I think the markets pricing of the outcome has not changed much.”.
Although the indicators initially rose very briefly with Trump’s early punches, Biden did well, suggested Shane Oliver, Head of Investment Strategy at AMP Capital in Sydney, in the same Reuters report. For the slightly longer term, that leaves a troubling question, Oliver says. “So, it’s no surprise to now see U.S. share market futures down as investors have gone back to worrying about a contested election, a delay in the outcome and whether Trump will go peacefully if he loses.”
That leaves open the possibility of continued uncertainty. “It is becoming more likely that we won’t have a clear-cut winner on the night of the election and could have a few weeks of contested period,” Loo said in the same Reuters report, adding that some markets do not seem to have fully factored that in yet.
“So, I expect risk-off trade on worries about a long-contested period.”