US election results have started to roll in after polls closed overnight, but with key ‘swing states’ pointing to a much tighter overall race, markets have had to recalibrate earlier expectations of a Democrat ‘blue wave’.
What does it mean for markets
This is especially true for the Senate, and should the Republicans keep control, this would suggest more of an economic status quo where fiscal policy hopes might be more constrained that they might otherwise have been under a Democrat majority. As such, a ‘blue wave’ of infrastructure spending looks a little less likely at this time.
What does Brooks Macdonald think
Coming into this week’s US election, markets have had to contend with two key potential headwinds for risk appetite: first, there was the risk of an inconclusive early electoral result and legal challenges; and second the risk of a corresponding delay to a long-awaited additional stimulus. With results so far pointing to a much tighter race than the polls had predicted in recent weeks, both of these risks remain a focus for investors. With no clear overall victory for either candidate at this stage, uncertainty looks to be the near-term reality for investors.