Stock markets rise, dollar falls as US votes

PHILADELPHIA, PENNSYLVANIA – NOVEMBER 05: Democratic presidential nominee, U.S. Vice President Kamala Harris speaks during the closing rally of her campaign at the base of the iconic “Rocky Steps” at the Philadelphia Museum of Art on November 05, 2024 in Philadelphia, Pennsylvania. On the eve of one of the tightest presidential elections in modern U.S. history, Democratic presidential nominee, U.S. Vice President Kamala Harris and former President Donald Trump are campaigning in key battleground states, with Harris campaigning across Pennsylvania and Trump campaigning in North Carolina, Pennsylvania and Michigan. (Kent Nishimura/Getty Images) (Photo by Kent Nishimura / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
PHILADELPHIA, PENNSYLVANIA – NOVEMBER 05: Democratic presidential nominee, U.S. Vice President Kamala Harris speaks during the closing rally of her campaign at the base of the iconic “Rocky Steps” at the Philadelphia Museum of Art on November 05, 2024 in Philadelphia, Pennsylvania. On the eve of one of the tightest presidential elections in modern U.S. history, Democratic presidential nominee, U.S. Vice President Kamala Harris and former President Donald Trump are campaigning in key battleground states, with Harris campaigning across Pennsylvania and Trump campaigning in North Carolina, Pennsylvania and Michigan. (Kent Nishimura/Getty Images) (Photo by Kent Nishimura / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
LONDON – Major stock markets mostly rose and the dollar remained under pressure Tuesday as Americans cast votes in a knife-edge presidential election.
Wall Street’s main indexes, which had fallen the previous day, rebounded in early deals after voting began in the world’s biggest economy.
In Europe, London fell as investors await an interest-rate decision by the Bank of England on Thursday while Paris and Frankfurt were slightly up in afternoon deals.
Equities in Shanghai and Hong Kong won strong support from hopes over China’s economy.
The dollar weakened against the euro, the British pound and the yen.
“A contested election result could cause volatility on the markets,” noted Russ Mould, investment director at AJ Bell.
“Equally, a clear winner quickly after voting ends could provide some relief to investors.”
A win for Republican Donald Trump is expected to restoke inflation and send Treasury yields higher owing to his pledges to slash taxes and impose tariffs on imports, which could support the dollar.
Analysts see less upheaval from a win by Democratic Vice President Kamala Harris.
Investors are also awaiting another US Federal Reserve rate cut on Thursday as inflation cools.
“A pro-tariff Trump presidency could see the dollar strengthen amid concerns higher inflation will prompt the Fed to keep interest rates higher,” predicted Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“There is likely to be a period of volatility particularly if the result is contested, but investors should keep their eyes on long-term horizons as historically financial markets have risen throughout both Democratic and Republican presidencies.”
Fawad Razaqzada, analyst at City Index and Forex.com, said markets had priced in a Trump win until the start of this week.
“While that could still be the case, Harris has closed the gap to make it a coin flip between the two candidates essentially,” he said.
“As things stand it looks like it could be a photo finish. This makes it extremely difficult to make a strong case for the direction of the dollar or stocks this week,” Razaqzada said.
– Asia up –
Hong Kong and Shanghai each closed up by more than two percent Tuesday after data showed China’s services sector expanded last month at its fastest pace since July.
The news came as traders await the end of a Chinese government meeting this week to hammer out an economic stimulus.
Officials are expected to give the go-ahead to about $140 billion in extra budget spending, mostly for indebted local governments, and a similar one-off payment for banks.
Chinese Premier Li Qiang, meanwhile, said he was “fully confident” that China’s economy would hit its growth targets this year and indicated that there was room to do more.
Oil prices gained less sharply, having surged almost three percent Monday after top producers agreed to extend output cuts through to the end of December and on worries about the Middle East crisis.
On the corporate front, Boeing shares fell slightly even though striking workers approved a contract proposal late Monday, ending more than seven weeks of stoppages that underscored discontent in the workforce of the beleaguered US aviation giant.