Global stocks were little changed but near a record high while the dollar and U.S. bond yields stayed sluggish on Friday on bets that a divided U.S. Congress would hinder government borrowing, which could pave the way for even more central bank stimulus.
Investors expect Democrat Joe Biden will beat President Donald Trump but Republicans will keep control of the Senate, allowing them to block Democrat policy such as corporate tax hikes and debtfunded spending on infrastructure.
From here, we believe the impact of the presidential result should be relatively small, said Lars Kreckel, global equity strategist at LGIM. Whether Biden or Trump are in the White House, governing with a Congress that is very likely to be divided would be difficult and mean very little policy that could significantly move equity markets would be passed.
A sense that a Biden presidency will be more predictable than Trumps is also underpinning risk sentiment, even though investors saw no quick rapprochement between the United States and China on trade and other issues.
Biden had a 253 to 214 lead in the statebystate Electoral College vote that determines the winner, according to most major television networks, putting him closer to the 270 Electoral College votes needed to win.
In Pennsylvania, which has 20 electoral votes, Biden cut Trumps lead to just over 18,000 by the early hours of Friday. His deficit in Georgia, which has 16 electoral votes, shrunk to about 450.