Early on Wednesday, U.S. stock futures jumped with U.S. President Donald Trump leading his Democratic rival Joe Biden in Florida and in other crucial swing states, which play a pivotal and deciding role in the election.
Extending its rally on Tuesday, S&P emini futures was up by 0.9%, while the S&P 500 index delivered its strongest one-day gain in nearly a month.
Nasdaq 100 emini futures also jumped by 2.6%, with some investors pointing to a lower threat of antitrust scrutiny for major technology companies under Trump compared to a Biden presidency.
While Trump led Biden in Florida, it is to be seen how he fares in other competitive swing states including North Carolina and Georgia.
Longer-dated U.S. Treasury yields retreated from five-month highs and Mexico’s peso weakened sharply.
Betting website Smarkets, odds reflected a 56% chance of Trump winning, up significantly from 33% earlier in the day.
“Trump is just doing better on the margin everywhere, and there have not been any big Biden upsets,” said Bob Shea, Chief Executive Officer at TrimTabs Asset Management in New York. “What we are seeing now is Trump doing better and people are just defaulting to ‘Trump is good for the market’, so why not just buy now and cut to the chase.”
Investors prefer a definitive, fast resolution to the election, rather than a drawn out process. A quick elections will clear the way for a much needed economic stimulus package to help repair the damage caused by the coronavirus-induced COVID-19 pandemic to the U.S. economy.
Previous results had also suggested that Democrats were less likely than previously expected to take the Senate from Republicans in a so-called blue wave, which incidentally would mean a more modest stimulus deal.
“The blue wave outcome that the markets were looking for has essentially gotten marked down from being a 90% possibility to a less-than-40% probability,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.