World markets were more or less volatile on Tuesday amid the pre-election point, while increased volatility was noted, especially in the currency market. Meeting global expectations of a close contest between Republican Donald Trump and Democrat Kamala Harris, overnight implied volatility options for the Euro/Dollar and Dollar/Mexican Peso pair hit a high level, with the last level seen in November 2016. This rise and sharp increase is due to an apprehension that Trump's protectionism policies may harm the peso.
Europe's STOXX index was down by 0.2% on the equity markets. In comparison, MSCI's Asia Pacific ex-Japan index rose by 0.7 %, which may reflect a bull day before arbs or an anticipatory move to defensive positions before Wednesday's opening bell. Fluctuations in the currency markets were slightly higher; the dollar fell to ¥ 152.46 and $1.0879 per euro.
Cryptocurrencies also responded, with Bitcoin increasing 2.7% to about $68,884 because of expectations that Trump could have better policies in the crypto space than Harris.
As the presidential campaign unfolded with four assassination attempts on Trump and President Joe Biden's unexpected withdrawal, the markets continued to be clouded by uncertainty. Trump's trade policies, particularly concerning their impact on inflation and trade balances, remain a focal point of interest for analysts and investors.
J.P. Morgan analysts neatly summed up the election stakes: economic policy continuity and institutional stability, free societies and Harris versus radical trade policy, further deglobalization, and authoritarianism represented by Trump, a choice between continuity and change.
