Stock markets across Europe and Asia soared on Election Day in the U.S. as investors anticipated a win for Democratic candidate Joe Biden.
Share prices in London saw their biggest daily rise in two months as market participants hoped that a Biden win would bring in a larger stimulus package to help the economy recover from the effects of the coronavirus pandemic, according to The Guardian.
Despite the fact that many polls suggest the presidential race between the former vice president and Donald Trump will be rather tight in many of the key swing states, the stock markets continued to rally on Tuesday.
The move was particularly surprising because this week marks several events that could cause further strain on the financial markets across Europe. These include the terrorist attack that took place in Austria on Monday, as well as the announcement of a nationwide lockdown in the United Kingdom that is set to begin this Thursday. Despite those factors and the uncertainty around the 2020 presidential elections, share prices still shot upward.
"It's quite surprising when you've got such a massive event-driven week, you can see a little bit of apprehension at the start of the week, but [this rally] has been quite the opposite," said Craig Erlam, a London-based senior market analyst at Oanda.
However, Fiona Cincotta, an analyst at Gain Capital, pointed out that it is necessary for a "blue wave" -- in which Democrats would also take over control of the Senate -- to happen for the financial stimulus to become a reality.
"Should Joe Biden manage to win the race, a blue wave, which includes control of the Senate, is needed for the markets to really get excited about stimulus. A Republican-controlled Senate indicates more gridlock to come and the markets will need to drastically scale back stimulus expectations," she said.
The U.K.'s leading stock market index, the FTSE 100, was up 131 points, or 2.33 percent, at close on Tuesday, as it finally picked up from last week's drop, which was propelled by fresher lockdown measures across many European countries and a rising coronavirus death toll in the United States.
According to The Guardian, the price rally started overnight with Asian markets and ended up spilling to Europe, where all the main stock markets registered gains. Similarly, the main indexes in America (Dow Jones, S&P 500 and Nasdaq) all recorded gains this morning. However, things may flip overnight depending on the election results, which may take longer than usual to call due to the unusual nature of this year's voting system, as The Inquisitr reported.