A Look at the Day Ahead in European and Global Markets

By Tom Westbrook

Election Day has finally arrived, putting an end to a heated campaign marked by assassination attempts on Donald Trump and the replacement of Kamala Harris with Joe Biden as the Democratic candidate.

In the face of uncertainty, markets exhibited a facade of stability. Trading desks reported that investors have reduced their risks and are now in a wait-and-see mode.

Amid this calm, Australia’s central bank opted to keep interest rates unchanged, which was widely anticipated, while Knight's Choice emerged victorious at the Melbourne Cup.

Oil prices have seen significant movement recently, increasing nearly 3% on Monday after OPEC+ announced a second delay in a planned output hike.

U.S. polling indicates an extremely tight contest, with gambling markets tightening their odds, prompting a reduction in financial market wagers on a Trump victory or a Republican-led sweep of Congress and the White House.

Analysts predict the dollar will rise if Trump wins and fall if he does not, although it is expected to rise against bitcoin, as Trump is perceived to be more lenient on crypto regulation.

Furthermore, the implied volatility for the offshore yuan against the dollar has reached record highs, reflecting apprehensions regarding potential protectionist policy shifts from the U.S. and their impact on global trade.

As results start coming in, attention will center on battleground states including Georgia, North Carolina, Pennsylvania, Michigan, Arizona, Wisconsin, and Nevada, with polls in Georgia closing at midnight GMT.

The announcement of a winner may take several days, and Trump has indicated he will contest any loss, reminiscent of his actions in 2020.

Key Developments Influencing Markets on Tuesday:

• U.S. Election

(By Tom Westbrook; Editing by Edmund Klamann)