🔒 Alec Hogg: Stocks soar as Mr Market excited by likely US election result

Share markets hate uncertainty. So, it seems confusing that US share prices are surging at a time when this week’s election results remain in abeyance. The reaction, however, is rational. In October, equity markets fell sharply as investors priced in the cost of an expected “Blue Wave” of a Democratic Party landslide that never arrived. Prices are readjusting to the reality of a split Congress.

Also read: Alec Hogg: Not quite done, but US voting may have provided perfect result

Both the S&P500 and Dow indices gained another 2% on Thursday night, their fourth consecutive increase of more than a percentage point in a single session. Our partners at the Wall Street Journal report this to be the longest winning streak for the indices since October 1982. It’s a run which takes the S&P and Dow to within a few percentage points of records set in early September.
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The most likely election result – Biden as president, Republicans holding the Senate – has been even better news for tech stocks. The Nasdaq Composite Index is still on a tear, gaining another 2.6% last night to get within a fraction of its September peak. Those who have replicated the BizNews Share portfolio will delight in another strong showing last night from Amazon (+2.5%), Apple (+3.5%), Spotify (+7.2%), Slack (+5%), Netflix (+3.4%), Cloudflare (+3.3%) and Microsoft (+3.2%).

Also read: Alec Hogg: Communist China stops world’s biggest IPO

Apart from promising to hike personal, company and capital gains taxes, the Democratic Party would have also introduced a Green New Deal (promoting renewables) and expand the Affordable Care Act, both of which analysts reckon to be ruinously expensive projects. With a Republican Senate likely to veto such proposals, investors are celebrating. Which, despite the other uncertainties, is the rational thing to do.

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