Share prices on the up as traders anticipate undisputed Biden win

GLOBAL stock markets collectively rallied yesterday, as investors bet on an uncontested Democratic victory in the US presidential election.

Europe’s main bourses all rose for a second consecutive day, led by the Milan exchange in Italy which gained 3.2pc. Shares in Frankfurt, Madrid, Paris and London f ollowed close behind, each adding between 2.3 and 2.6pc.

The continent followed Asia Pacific’s lead, after indices in the East ended trading with a sea of green across all the main bourses except Malaysia’s Kuala Lumpur. Among them China’s Shanghai Composite and Tokyo’s Nikkei both boosted 1.4pc, while Hong Kong’s Hang Seng index rose 2pc.

America also indicated optimism as its citizens headed to the polls, despite the election being one of the most controversial in decades, with the S & P 500 up around 2pc in early trading.

Investors are expecting Joe Biden, the Democratic candidate, to fulfil his promise of a post-election economic stimulus package to aid a slumping US economy.

Chris Beauchamp, chief market analyst at IG, said: “It looks like markets have decided to remain calm about the US presidential election, as European stocks move sharply higher. The risk is that investors are getting ahead of themselves, given the potential for a long drawn-out battle over the result in coming weeks, should no obvious result appear by [this morning]. In that case, risk assets could well struggle to make much headway.”

Gains this week also come as traders attempt to remove chunks of recent losses. Last week’s sweeping sell-off wiped £72 billion from the FTSE 100 to conclude its worst month since March. Asian markets and Wall Street also fell sharply, while Europe closed marginally higher.

Yesterday’s positivity points to just how poor market sentiment has been in recent weeks, noted Craig Erlam, senior market analyst, OANDA Europe. “It seems the positioning ahead of the election has already been very risk averse, heavily aided by Covid lockdowns. So perhaps some investors are [now] sensing opportunity.”