“Early this morning it looked as if President Trump was heading towards a very narrow second term victory, however, absentee ballots have now cast his re-election in doubt. Donald Trump has exceeded all expectations from pollsters and professional pundits but may not be quite enough to keep him in the White House. As the mail-in votes continue to be counted in the rust-belt states of Pennsylvania, Wisconsin and Michigan, it is looking as if Democratic challenger Joe Biden may have enough of a lead to sneak through a victory. It is likely to be a few days before any formal announcement is made by the states that are still counting, and even then there could be a legal challenge from either side depending on how the votes goes.
“It is looking as if the United States Congress will maintain its current composition, with a Democratic House and a Republican Senate. Republicans held a 53-47 majority in the chamber going into the election and have so far the Democrats have net gained one seat. There are two tight races still to be announced in Maine and North Carolina (both currently held by Republicans), and a likely run-off in Georgia that the Republicans will hold – although the election will be held in January. This is likely to mean that should Joe Biden win the election, he will have to seek compromises with the Republican Senate in order to enact any legislation. This will likely provide a check on the more radical elements he may face from within his own party.
“From an investment perspective, the markets have not been very volatile throughout today. They seemed satisfied to know that there is unlikely to be a ‘blue wave’ – a Democratic clean sweep of both houses of Congress and the Presidency – meaning the likelihood of large tax increases and increased regulation from the next administration is low. This could change if any of the senate seats in closely held states look as if they are in contention again as more results come through. While markets did stutter across Europe as President Trump prematurely declared himself the winner and asked for voting to stop to ensure integrity of the process, the concerns did not last long. The gold price has been marginally down all day reflecting a happy risk outlook from investors.”
Randeep Somel, Equities Fund Manager, M&G Investments: