First take on the US elections

America has cast its vote and the polling stations are closed. First indications suggest that it will again be a close race, as Donald Trump has (once again) done better than most election experts had predicted. Now it all depends on the results in the Midwest. Our first take on the US elections.

America has cast its vote. And who the new (or new old) president will be is not yet certain. Contrary to the opinion of many pundits, it will probably be a very close race – as it was four years ago. Donald Trump is doing better than expected and has won the majority of votes in important swing states such as Florida and Ohio. A landslide victory for the Democrats and their candidate Joe Biden seems more and more unlikely. The decision will probably be made in the states of the Midwest – with the focus being on Pennsylvania, Michigan, Wisconsin and Georgia. The question of whether the Democrats can win a majority in both chambers of the US Congress looks equally narrow.

It could take some time (and even a lot of it) before the final election results are in. Not least because of the pandemic a particularly large number of U.S. citizens voted by mail, which could bring its own complications with it, since in some states these votes are only finally counted in the next few days. And the lawyers of both parties in the contested states are ready to challenge a close result in a timely manner. Donald Trump has already shared his opinion via his favourite channel (Twitter) on election night and questioned the legitimacy of the election. Later he announced that he would go to the U.S. Supreme Court to stop the vote count in the battle states. Trump had already made it clear before the election that he wanted to declare himself the winner early on, and his latest actions follow this path. Whether he will peacefully throw in the towel in the event of defeat must be more than doubted at present.

Nervousness and volatility on the financial markets are likely to remain high.

Since, in the worst case, it could take several days (or even weeks) before the final election result is known, nervousness and volatility on the financial markets are likely to remain high. US futures initially reacted to Donald Trump’s relatively better performance during the night with price gains, while the US dollar weakened. However, the signs could change again within a few hours, depending on the news situation. After the US markets have priced in the scenario of a “blue wave” in the last few days, the biggest potential for disappointment is that Trump will stay in the White House for another four years. In the coming days, we will follow further developments closely. When the fog has finally lifted around the election results – which hopefully will be sooner rather than later – we will follow up with another election update.