Global investors were on edge as Americans headed to the polls on Tuesday, drawing to a close a dramatic US election cycle that has moved bonds, stocks and other assets in recent months and could further sway markets as results become clearer.
One of the most unusual elections in modern US history could yield starkly different implications for tax and trade policy as well as for US institutions depending on whether Republican Donald Trump or Democrat Kamala Harris prevails.
The results could rattle assets around the world and lead to broad financial fallout, including on the outlook for US debt, the strength of the dollar and a host of industries that make up the backbone of Corporate America.
With polls showing a dead heat between the former president and the current vice president and control of the US Congress also at stake, investors are wary of any unclear or contested result that could fuel volatility stemming from any lasting uncertainty about the political backdrop.
As votes start to be reported on Tuesday evening, investors will train their attention on tallies from a handful of bellwether counties across the country that could indicate early clues about the winner. But many of the battleground states that will decide the race may not have meaningful results until at least late at night.
“This is the most significant election that I have seen in my career,” said Mike Mullaney, director of global markets research at Boston Partners, who has worked in investment management for over 40 years.
“It’s going to be very bifurcated, with certain things happening under Trump winning, and certain things happening under Harris winning,” Mullaney said.
The focus on the election follows a stocks rally that has taken the S&P 500 to record highs in 2024 with a roughly 20% year-to-date run, driven by a robust economy, strong corporate profits and interest rate cuts from the Federal Reserve.
The S&P 500 was up 0.8% on Tuesday morning, with several assets whose recent price swings have been linked to Trump’s standing in polls and betting markets gaining ground.
Several measures of trader demand for protection against outsized overnight price swings in the currency market surged to their highest since the November 2016 election.
