Joe Biden Wins US Elections: What’s Next For The Markets?
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Key Takeaways:
- How did the financial markets react?
- What should you look out for when trading this week?
As the world reels from the announcement of Joe Biden’s win in the U.S. Presidential Elections, we take a closer look at the financial markets’ performance. Last week, markets ran amok as the election results developed. We are now settling down from the weekend’s volatility and forex traders are looking at a more stable environment for their trades.
In this article, we look at specific financial markets and their reaction to the new developments in the US Elections. We also explore possible developments that traders need to look out for in the coming weeks.
How is the US Dollar Performing as Biden Clinches U.S. Presidency?
On Monday, November 9th, the US dollar plummeted to a new 10-week low. This was a result of investors buying out currencies that were trade-exposed. This was done on the assumption that a new government led by Joe Biden would mean a calmer, more stable country and this (hopefully) will reflect on the currency.
Taking a look at other currencies, the Chinese yuan just skyrocketed to a 28-month peak, the New Zealand dollar made a 19-month high while the Australian dollar hit a seven-week top as the dollar index fell to its lowest since early September. South Korea is at a 21-month high of 1,115.33 per dollar.
The UK Sterling hit its highest peak in the last eight weeks. The euro rose 0.1%, extending an almost 2% gain from last week to hit a two-month high of $1.1895.
Looking ahead, Westpac currency analyst Sean Callow stated: “The undertow of dollar weakness is probably going to have a bit of a way to run in terms of the Fed and also less trade tension as something positive for other currencies”.
How are Stocks Reacting to this Win?
The stock market seems to favor Joe Biden as investors react positively to a change in government. Joe Biden’s election spurred expectations that Biden will usher in a more diplomatic approach to US foreign policy and this in turn boosted global stocks. In London, the FTSE 100 (UKX) was 1.6% higher on Monday. France’s CAC 40 (CAC40) rose by a similar margin and Germany’s DAX (DAX) gained 1.9%.
What to Look Out for When Trading this Week?
Investors need to keep a watchful eye on the news in the coming days for further developments. Last Saturday, Joe Biden announced plans to assemble a coronavirus taskforce that should help in containing the spread of the virus. This, along with other news of the pandemic, is set to rock the markets in the coming days.
It is also important to watch out for President Trump’s erratic behavior over the next ten weeks. Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison LLP stated: “There is no telling what he might try to do and no ability to predict how the markets might react in response.”
All in all, it is set to be an exhilarating week as the markets are still reacting to this historic development in American politics.
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