NEW YORK (US) – As ballots were counted in several states, stocks in the US took a breather in after-hours trading on Wednesday.
Close on the heels of a 2.3% rally in the S&P 500 on Wednesday, S&P emini futures climbed 0.25%. It was catalysed by the prospect of a Congressional gridlock after Democrats appeared to have failed to take control of the Senate. This triggered optimism that disruptive policy changes would be hard to implement regardless of who comes to power.
The greenback index had ceded its gains by early Asian trade and was up at 93.53 after reaching a one-month high of 94.308 during the US day. US 10-year Treasury note futures witnessed the prolonging of a huge gain after Treasury yields fell hard on Wednesday.
According to Jim Wilding, Wealth Manager, Partner, Confluence Financial Partners in Pittsburgh, “A Biden Presidency with divided government (REP Senate, DEM House) would very likely result in more gridlock, and a more neutral impact on markets. We could see increased spending for infrastructure and economic recovery, but limited legislation changes and limited support for tax increases.
“If Trump is reelected, and the Senate remains Republican, we are unlikely to see tax increase, which would be viewed as a positive by the market. Trade battles with China would likely intensify and regulatory changes may pick up even more. An infrastructure bill could also be possible.”