WATCH: Futures lower as investors close out 3rd quarter
Stock markets oscillated between gains and losses on Wednesday, as investors reacted with unease to the first presidential debate between Donald Trump and Democratic candidate Joe Biden.
The president and his challenger held their first televised debate on Tuesday evening. The New York Times said it was characterised by “cross talk, lies and mockery” and “unravelled into an ugly melee.”
Investor attention has zeroed in on the US presidential race this week. With less than 40 days to go, the outcome is likely to determine the future path of the world’s biggest economy.
European stock markets and US futures fell in early trade on Wednesday. Analysts said answers given by Trump fuelled fears of a contested result in November.
“The US futures moved higher during the debate as investors saw Joe Biden showing his strong position against Donald Trump, but the Dow Jones took a complete U-turn after the debate because investors believe that if Trump loses the election, the transition of power is not going to be smooth,” said Naeem Aslam, chief market analyst at Avatrade.
“The presidential debate reinforced market concerns that Trump isn’t going to accept his defeat that easily.”
Watch: Trump v Biden — the seven defining moments of the US presidential debate
By mid-afternoon in Europe, fears had eased. European markets pared back losses and Wall Street opened higher.
However, stocks took a dive at the close. The German DAX (^GDAXI) and FTSE 100 (^FTSE) both ended down 0.5%, while the French CAC 40 (^FCHI) dropped 0.6%. The late sell-off highlighted the jitters in the market.
Chris Beauchamp, chief market analyst at IG, said US stocks were boosted by hopes of further stimulus measures from Washington.
“The Treasury secretary said that he was ‘hopeful’ that some kind of a deal would be done, and this has meant that, after a slow start, US indices have moved firmly into positive territory,” Beauchamp said.
Even as the anxiety caused by the first presidential debate eased, investor attention remains firmly focused on US politics.
Kiran Ganesh, a multi asset strategist at UBS Global Wealth Management, said: “Although there was little of substance on policy, the bitterness of last night’s debate does perhaps increase the chance of a contested election.
“Historically there hasn't been any correlation between the results of election debates and subsequent elections, and this debate certainly did not clarify the election outcome, or provide any meaningful information for investor positioning.”
Stocks were mixed in Asia overnight. Japan’s Nikkei (^N225) fell 1.5% and Australia’s ASX 200 (^AXJO) dropped 2.3%. In China, the Shanghai Composite (000001.SS) fell 0.2% and the Shenzen Component (399001.SZ) was flat, while the Hong Kong Hang Seng (^HSI) rose 1%.
Watch: Americans react following first presidential debate