Markets take poll position

equities recover from early jitters with u.s. polls still up in the air

dubai — Regional and global stock markets were volatile on Wednesday but recovered to positive territory late as a too-closeto-call US presidential election left traders betting on a divided Senate that would keep stimulus flowing but hold tax rises and regulation in check.

In the Gulf, most bourses ended higher, mirroring gains in oil prices, after US President Donald Trump falsely claimed victory in the elections that proved far closer than polls had predicted.

Saudi Arabia led with a 1.1 per cent advance, boosted by a 2.9 per cent rise in Samba Financial Group and a 0.7 per cent increase in Saudi Aramco. Dubai rose 0.7 per cent as Dubai Islamic Bank climbed 1.8 per cent and Emirates NBD Bank gaining one per cent.

In Abu Dhabi, the index was up 0.9 per cent, led by a 3.8 per cent jump in International Holding.

Egypt’s blue-chip index closed up 0.4 per cent, while Bahrain and Qatar added 0.3 per cent each. Oman and Kuwait both fell 0.1

per cent. [The election] environment is conducive to volatility and a retreat towards safe havens Didier Borowski,

Head of global views at Amundi

We are seeing a nightmare situation come true because now we are talking about legal battles. This uncertainty is going to keep traders on edge Naeem Aslam,

Chief market analyst at Avatrade

Wall Street gained ground after a jittery start, with the S&P 500 up 2.9 per cent as at 1137ET. The Dow Jones Industrial Average rose 2.3 per cent, while the Nasdaq composite jumped four per cent.

Investors see cause for optimism if either candidate wins, but much is at stake pending the results. They include prospects for a big stimulus effort for the economy, potential tax rate increases and tighter regulations on businesses that investors saw coming from a potential Democratic sweep of the elections, something that has so far failed to materialise.

Europe’s main bourses London, Paris and Frankfurt were dragged along too. They overcame initial drops having also shrugged off data showing the region heading for a double-dip recession.

Amundi’s head of global views Didier Borowski said prudence was needed with the US result in limbo. “We expect an 85 per cent likelihood of knowing the winner within 10 days.” However, there is a “real possibility” it could take until January, including the Senate. “This environment is conducive to volatility and a retreat towards safe havens.”

Much of the strength for Wall Street was due to big gains for technology stocks. Investors have increasingly seen these stocks as some of the safer bets in the market, able to grow their profits even in a pandemic as more of daily life shifts online.

They don’t need a big stimulus effort for the economy as much as other companies, leading to the much better performance for the tech-heavy Nasdaq over other indexes. Microsoft, Amazon, Facebook and Google’s parent company all rose at least five per cent.

All the swings are a bit reminiscent of four years earlier, when Trump surprised the market by winning the White House.

Other areas of the stock market, where profits are more dependent on the strength of the economy, lagged behind. Financial stocks in the S&P 500 were close to flat. The Russell 2000 index of smaller companies edged up 0.6 per cent.

Europe’s major bourses also closed up, with London’s FTSE 100 climbing 1.7 per cent, Frankfurt’s DAX rising two per cent and the Paris CAC 40 jumping 2.4 per cent.

Earlier in Asia, indices mostly closed up, but that was ahead of Trump declaring he would dispute the election. Tokyo’s Nikkei leapt 1.7 per cent and the Shanghai Composite gained 0.2 per cent, but Hong Kong’s Hang Seng dropped 0.2 per cent. Seoul’s Kospi rose 0.6 per cent and Sydney’s ASX inched down 0.1 per cent. The Sensex in Mumbai gained 0.9 per cent, while Manila jumped two per cent.

“The US election has become a mess,” said Naeem Aslam, chief market analyst at Avatrade.

“Basically, we are seeing a nightmare situation come true because now we are talking about legal battles. This uncertainty is going to keep traders on edge.”

Gold, meanwhile, pared losses after sliding over one per cent as the dollar steadied.

Spot gold inched down 0.1 per cent to $1,906.80 by 1428GMT). US gold futures were flat at $1,909.70.