Investors are concerned that there may be no clarity on the winner of the US presidential election. This comes at a critical time for global markets, when the US Federal Reserve and the Bank of England will make interest rate decisions on Thursday.
Writes UNN with reference to The Financial Times.
On Tuesday, investors around the world held their breath after a tumultuous US election campaign that had a noticeable impact on markets and could further affect financial assets. Wall Street is gearing up for a long night as market sentiment remains feverish. As Americans head to the polls to determine who is more deserving of the presidency - Democrat Kamala Harris or her GOP rival, former President Donald Trump - investors admit they “won't know where to jump” until the polls close.
The knife-edge election is seen by investors as a potential turning point.
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If the Republican Party takes the White House and gains control of both houses of Congress, investors are concerned that the promised mix of tariffs and tax cuts could fuel inflation and put pressure on interest rates to rise.
This has already led to a rise in the dollar.
Treasury yields have also risen in recent weeks, as they move inversely to bond prices, as investors assess potentially higher inflation as a result of the Republican billionaire's planned policies.
The market is being pulled and pushed in different directions as investors try to factor in the many unknowns surrounding the election... In the coming week, we will have certainty: either it will reinforce this positioning or there will be a shock