Global stock markets have rallied sharply as Americans head to the polls – with the likely impact of any result on economic stimulus preoccupying investors.
London’s FTSE 100 was 2% higher in early afternoon trading with European markets also ahead, picking up after gains from Wall Street and in Asian trading overnight.
There were further gains when New York trading opened again on Tuesday, with the Dow Jones, S&P 500 and the Nasdaq all about 1% higher.
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The economic arguments as the US votes
The upturn for shares as America chooses between Donald Trump and challenger Joe Biden comes after a grim end to October last week, which saw the FTSE record its worst monthly decline since March.
Fears over the economic impact of a second wave of coronavirus infections and fresh lockdown measures have unsettled traders recently.
A market slump earlier in the year was stemmed when central banks and governments – led by the US – unleashed unprecedented stimulus measures.
Now, some traders appear to be betting on Joe Biden leading a Democratic sweep of the White House and the Senate, allowing him to deliver a further big package of spending measures.
Investors and economists say fresh stimulus is needed but so far progress has been held up by squabbling between Democrats and Republicans in Washington.
In London, investors are also eyeing prospects for a Brexit deal and speculation that the Bank of England will trigger a further round of money-printing or quantitative easing later in the week.
Craig Erlam, senior market analyst at Oanda, said: “We’re heading into an extremely uncertain period and if we could see the smooth US presidential election, a vaccine announcement in over the coming weeks and a Brexit deal… all of these are very supportive factors for the markets.”
Christian Stocker, lead equity sector strategist at UniCredit, said: “Currently, the market is betting on a Biden win.
“Under a Biden presidency, the US economy should be more supportive for equity markets.”
But Berenberg chief economist Holger Schmieding warned that some investors could be jumping the gun, especially if a clear winner does not emerge swiftly after the vote.
“I’m more nervous than European markets are today,” Mr Schmieding said.