TORONTO — North American stock markets enjoyed a relief rally as the long and contentious U.S. election comes to a close.
The S&P/TSX composite index was up 246.68 points or 1.6 per cent at 15,943.55 in a broad-based rally.
In New York, the Dow Jones industrial average was up 531.94 points at 27,456.99. The S&P 500 index was up 61.05 points at 3,371.29, while the Nasdaq composite was up 215.14 points at 11,172.75.
Rising bond yields and a lower U.S. dollar is viewed as a sign by some that Democrats could sweep the White House and both houses of Congress and allow for a massive fiscal stimulus.
“That’s a bit of a tell so far, and we’re seeing a bit of a move higher in some of the cyclicals and the rotation trade,” said Greg Taylor, chief investment officer of Purpose Investments.
On the other hand, a win by President Donald Trump would be good for tech stocks, which got a decent bounce after a few ugly days, he added in an interview.
“So it’s almost right now we’ve got people are betting on both sides and we’ll see what the outcome is going forward.”
Taylor said the worst-case scenario for investors is if an outcome takes days to settle and pushes the market to selloff again.
“That’s why I think we’ve got a lack of volume today as people aren’t making real big bets.”
Tuesday’s afternoon gains come after markets posted their worst week since the large COVID-19 induced market correction.
“We’re looking for a bit of relief rally. And the more people are looking at this trying to figure out just how the election is going to play out, it feels like any outcome is a positive,’ he said.
Once the result is clear, volatility should come out of the market, pushing it higher.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said stock markets around the world climbed overnight after posting increases on Monday.
“This week’s gains so far appear to be driven by a sense of relief among investors that the long and divisive US election campaign is finally over,” he wrote in a note to clients.
“Uncertainties remain that have the potential to significantly impact investor attitudes and confidence in the coming days.”
In 2000, markets came under pressure when the election dragged on for weeks before being decided by the Supreme Court in favour of George W. Bush.
“While there could be civil unrest following the vote, the experience from earlier this year suggests protests may capture more attention from the media than from the market,” Cieszynski added.
The Canadian dollar traded for 76.00 cents US compared with 75.43 cents US on Monday.
The December crude contract was up 82 cents at US$37.63 per barrel and the December natural gas contract was down 18.5 cents at US$3.06 per mmBTU.
The December gold contract was up US$18.70 at US$1,911.20 an ounce and the December copper contract was up 1.85 cents at nearly US$3.10 a pound.
This report by The Canadian Press was first published Nov. 3, 2020
