The US presidential elections are in the worst possible scenario.
That of the uncertainty that is on the way to lead to a serious institutional crisis. In the early hours in the United States, Donald Trump has appropriated a victory that does not yet exist at the polls and has threatened to appeal to justice if the counting of the votes by mail is not stopped, which can mark him as a loser.
Nothing is clear at the moment. In these very atypical elections marked by the pandemic and by a flurry of early voting and by mail, the scrutiny can be delayed and leave a different result than the one now presented.
Trump, who, at the present time, was leading the electoral result, has accused the Democrats of trying to steal the election, thus confessing concern about the outcome.
During the presentation of the partial results by States, the market has acted very clearly.
The German DAX index also saw gains.
As we commented in yesterday's analysis, a Trump defeat would be beneficial for Europe by ruling out the possibility of imposing tariffs on exports from the European Union.
The Nasdaq technology index, however, has continued to rise, even within the current chaos and uncertainty, which confirms that a victory for the current president would be seen by the market as favorable for the technology stocks that make up this index.
In the currency market, almost all pairs are still undecided. During the course of the scrutiny, while Biden seemed to have a clear advantage, the Dollar weakened, but as the confrontation for the result and uncertainty began, the Dollar has strengthened marginally, erasing some of the previous losses.
This indicates a structural downtrend that is likely to continue once there is a clear election outcome. However, the lack of results, the confrontation between the contenders and, in general, the uncertainty, if it continues, could strengthen the USD, which in this case would act as a safe-haven.
In any case, whatever the final outcome of the elections, the Fed will have to continue with its low interest rate policy and with its asset purchase program and this will result in continued downward pressure on the US currency.
The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.
As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.
The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.
JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors