Markets climbed on Nov. 2, one day before the U.S. 2020 election.
Despite the election looming ahead, U.S. stock indexes jumped Monday morning with the Dow Jones Industrial Average gaining almost 2%, the S&P 500 rising 1.6% and the Nasdaq Composite rising 1.2%.
The positive gains came after the market’s worst week since March’s crash and “some investors appeared to believe the market was oversold after last week’s rout, boosting equities on Monday,” according to The Wall Street Journal.
Former Vice President Joe Biden continued to lead the polls by10% over President Donald Trump, according to a joint poll between The Wall Street Journal and NBC News.
However, after the results of the 2016 election, investors are paying less credit to such polls and the markets remain uncertain.
Investors are increasingly hoping for a “definitive result in the presidential race, helping avoid a contested outcome, and clear control of the Senate and House by the same major party. That would lead to more clarity on additional stimulus packages and new legislation on health care and taxes,” according to Morning Star.
Outside of the election, new factory data and lockdown measures put the market at odds. The factory data was positive, with U.S. factory activity expanding rapidly in October.
The Institute for Supply Management reported that its purchasing-managers index came in at 59.3, sharply up from the 56.0 predicted by economists. After crashing due to low demand from coronavirus disruptions, manufacturing is making a rebound with strong demand for consumer goods. Lockdown measures continue however, with the United Kingdom, France, Germany, Ireland, Austria and Belgium all putting new restrictions in place.
Moving onto specific companies, the earning season continues. Clorox was up 6% after posting revenue that sharply beat analyst expectations. Estee Lauder shares followed the same trend, climbing 4%.
Dunkin’ Brands’ share rallied an impressive 6.3% after it was announced Inspire Brands, the owner of Arby’s, would acquire the company for $8.8 billion. PayPal Holdings and Mondelez International posted results after the market closed on Nov. 2.
Internationally, the pan-continental Stoxx Europe 600 was up 1.6%, led by French and German stocks. There were technical difficulties as the European markets opened, with index prices not being updated for more than an hour in the Euro Stoxx 50. In Asia, Japan’s benchmark Nikkei 225 added 1.4%, while Hong Kong’s Hang Seng rose 1.5%.
There is an increasing focus on Asia as a sanctuary when compared to the United States. “Investors are viewing Asia as a safe haven ahead of a good probability that we could see a contested election,” David Chao, Invesco’s global market strategist for Asia-Pacific excluding Japan, said.
Investors around the world eagerly await the results of the U.S. presidential elections, with significant implications surrounding future government response to the coronavirus and anticipated fiscal stimulus releases.
