Traders Look for Post-Election Reset

After a week in which markets barely had time to draw breath as Joe Biden inched toward victory in the U.S. presidential election, traders are preparing to dive right back in.

With the Democratic challenger’s win over President Donald Trump declared on the weekend, Monday provides the first opportunity to react to the prospect of a change of guard at the White House. The broad verdict is that a Biden administration will be a positive, as more predictable policies lift global trade, even if the possibility of a divided Congress puts limits on the amount of economic stimulus that will be implemented.

Biden “might struggle to get the $3 trillion wanted by Democrats, but some package is likely,” said Nigel Green, the Zurich-based chief executive officer and founder of deVere Group, a financial-advisory firm. “This will buoy the markets and would have investors think about a broader-based economic recovery. As the world’s largest economy, sustainable, long-term growth in the U.S. will have a positive ripple effect for the world economy.”

Biden at the weekend called on Americans to put aside their divisions in avictory speech that promised swift action against the coronavirus pandemic and an orderly transfer of power following the election. Still, the 46th president won’t take office until Jan. 20 and there remains the potential for disruption before then. Trump has vowed to challenge the election outcome in several states, alleging without evidence that there was widespread fraud in the vote.

Currency markets will be the first to get going for the week at around 1 p.m. Sunday New York time, while trading in U.S. stock and Treasury futures is expected to begin around 6 p.m. New York time.

“The dollar should structurally remain weaker, and this means that world currencies will still look to strengthen in time,” said Jameel Ahmad, the London-based director of investment strategy at German fintech group NAGA. However, global stocks “are not likely to continue last week’s extravagant surge as a result of contested election fears. This is an unknown hazard and all of us are anxious to see it play out domestically in the U.S. because the current administration do not look like they will accept the 2020 presidential race without a fight.”

Last week was a tumultuous one for markets. Stocks soared, Treasuries were whipsawed and the dollar slid. Assets were affected not only by incoming results from America’s Nov. 3 vote, but also by theFederal Reserve’s latest policy decision and the monthly report, which came in stronger than expected.

Markets rallied Sunday in the Middle East, the first to trade after Biden’s victory. Stocks in Dubai posted their biggest three-day rally since August. Saudi Arabia extended the longest streak of gains since Oct. 13. The Kuwait gauge closed above its 50-day moving average, while Oman stocks had the first back-to-back advance in a month. Israel’s main index rose to a two-month high.

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