US Presidential Debate Fluctuates Global Markets




Last Tuesday, the presidential debate turned shambolic and tempestuous as Trump and Biden exchanged verbal blows throughout the event. The tension left Chris Wallace, the debate’s moderator, disarrayed in mediating the situation. Furthermore, a number of US media said that the event has brought shame to America and could even influence the sentiments of investors. As aftermath, according to the traders, U.S. Stock Futures declined early Wednesday morning. Researches from LPL Financial found that throughout history, from 1960 to 2016, first presidential debates usually caused the S&P 500’s total return to decline for five days to one month on average. Despite the aforementioned notion, The Dow Jones Industrial Average jumped 410 points, or 1.5%, while The S&P 500 gained 1.1%. In addition, the tech-heavy Nasdaq Composite climbed 1.2%. On the contrary, Stocks Europe 600 Index fell 0.3% and the German Dax dropped 0.1% on the last day of trading in 2020’s third quarter. However, the situation worsened even further today, wherein U.S Stock Futures dropped even further (S&P 500 and Nasdaq 100 futures down 1.3% and 1.8% respectively) today after the abrupt news of U.S President, Donald Trump, contacting the novel coronavirus.


Following the first presidential debate between Donald Trump and Joe Biden, last Wednesday The Dow Futures Index has fallen by 1.09% which has impacted The S&P index to decrease by 0.02% and also the Nasdaq which was being traded in the red zone at 0.11%. Before the debate, The Dow Futures Index hit the green zone with an increase of 0.88%. Unfortunately, they lost the momentum halfway through the chaotic debates between Trump and Biden. According to several Market Strategists, the uncertainty surrounding the election has become the main obstacle for the market before the end of the year. Some considerable number of investors are troubled with the potential of Biden's triumph over Trump, which would cause the increase of corporate taxes and regulations. However, the same condition could calm the tension of the trade war and concerns about the lack of stimulus. Other than that, Investors are also worried about the potential that the results of the presidential election are too close to call and that neither of the candidates would concede. Which uncertainty of the election could particularly weigh on the market. According to Daniel Deming, Managing Director of KKM Financial, “The short-term volatility pressures probably won't abate anytime soon after this debate. In a sense, it's creating even more uncertainty".


The presidential debate between Trump and Biden not only has an impact on the US Market but to the global exchanges. By early afternoon Wednesday (9/30), European exchanges were also affected, as shown in a 0.2% declined on Europe-wide Stoxx 600 and 0.5% dropped on Frankfurt's Xetra Dax and France's CAC 40. The late release also impacted Asia-Pacific markets with The MSCI Asia Pacific Index fell by 0.6%, and Japan's Topix corrected by 0.4%. Meanwhile, the Chinese and South Korea market were closed because it is a national holiday in both countries. Actually, on the economic data front, China's official manufacturing Purchasing Managers' Index (PMI) for September came in at 51.5 as compared to 51.0 in August, according to the country's National Bureau of Statistics. This circumstance led to the mix performances in the Asia-Pacific market on Tuesday (9/29). The Shanghai Composite down 0.2% to about 3,218.05, Japan markets were even lower, with the Nikkei 225 shedding 1.5% to close at 23,185.12. Contrarily, Hong Kong's Hang Seng index rose 0.79% to close at 23,459.05. Reacting from the global stock exchange, The Jakarta Composite Index (JCI) is fluctuating. On Wednesday, JCI was increased by 0.44% to 4,900 level. However, it closed at 4,870, which was down 0.53% from the opening of trading. On Wednesday, analyzing the mixed sentiments driving the benchmark nation's index to fluctuates, Lanjar Nafi--Head of Research at Reliance Sekuritas Indonesia, responded by stating, "So that technically the JCI has the potential to move mixed with support resistance of 4,816-5,070,". Overall, the presidential debate affected the US market and fluctuated global exchanges. This condition also shows that the US market has a powerful influence on other international exchanges' movements.


Sources:

CNBC

Yahoo Finance

BBC

Financial Times


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