All throughout the world, be it democratic, oligarchic, or any other system, the government indisputably plays a pivotal role in the lives of its citizens. Due to the utmost importance held by the leader of said country, the process of selection, otherwise known as the election day, is the day people long for to express their desires. On the 3rd of November, the United States held their election day; the time to determine the fate of the country. The frenzy served by the election day has certainly inflicted subsequent effect to multiple sectors, one of which being the stock market. Furthermore, due to the sheer influence that the United States exerts towards all countries all across the globe, the uncertainty of the next U.S President has impacted the global market as well.
On Thursday (11/5), despite the unclear election results, US equities’ still uprush as hopes for a blue wave in Congress dwindled, which some argued would have been a headwind for areas of the market including Big Tech. Based on Thursday’s trading session, indexes rose where Dow Jones increased by 395 points to 28,130, S&P 500 jumped to 3,498.75, and the Nasdaq 100 grew to 12,084. As these stocks traded in the green zone, investors are currently hoping that the final result of US presidential election would soon be defined. Don Calcagni, Chief Investment Officer of Mercer Advisors said, “More than anything, the market is looking for a peaceful transition of power. Social unrest or a contested election could trigger a significant increase in volatility,”. However, several strategists noted that a contested election (currently not of the table) could lead to a sharp drop in stocks over the short-term. Afterwards, on Friday (11/6), the rally ran out of momentum as shown by the decreasing of S&P 500 index for 1.06% to 3,467.50, the Dow Futures and Nasdaq stumbling by 0.83% to 28,062, and the Nasdaq falling by 1.47% to 11,899.
Apart from the US market surge, global stock markets did not miss the current rally either. After suffering their worst week since March, notably caused by renewed COVID-19-related lockdowns across its countries, European markets climbed up surely and boldly. On Tuesday (11/3), The FTSE (UKX) boosted up by 1.7% in London, Germany's DAX (DAX) leaped by a notable 2.1% rise, while France's CAC40 also up by a similar number. European markets' climbed also prompted by the Asian markets, where equities reported their significant gain in current times. On the same day, China's Shanghai Composite added 1.4%, South Korea's benchmark index, KOSPI, and Hong Kong's Hang Seng index also advance by 1.4% and 2%, respectively, on hopes that Biden presidency can loosen up on tariffs and other trade regulations. How about Indonesia? US election result said to generate a positive lasting impact on its market in mid to long-term. Hariyanto Wijaya, Mirae Asset Sekuritas head of research, believed that the positive sentiments for the JCI would offset the negative impact following the late news of the nation's GDP contraction in Q3. IDX's President Director, Inarno Djajadi, also stated that the election would significantly impact the JCI performance. "We'll wait for the election in a moment. Usually, there will be euphoria, and Dow (DJIA) will rise," implying that the rise in Dow Jones will affect other markets, as he stated on Sunday (11/1), prior to the election. In summary, we can see the once in a four-year US election brings a massive sentiment not only in the US but also to all markets worldwide.
The Financial Times
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