US markets are tipped to open in the red as the battle for the White House drags on for a third day.
Stock futures for the blue-chip S&P 500 fell 0.5 per cent overnight and the Nasdaq futures market is down 0.6 per cent this morning (November 6).
This would turn the tide on what has been a resilient showing from the US markets, with the S&P 500 up more than 5 per cent since election day while the Dow Jones index has risen 4.5 per cent in the same time (November 3).
The election has been too close to call over the last three days, with the overall result pinned on voters in just a handful of battleground states.
Both candidates have said they believe they are on the path to win, although Democrat challenger Joe Biden stopped short of declaring victory.
Incumbent president Donald Trump, whose lead is shrinking in some key states, has made numerous unverified claims of voter fraud and “tremendous corruption” in the mail-in ballots.
Mr Trump has filed a number of lawsuits alleging such “irregularities” in several states — where Mr Biden has the lead — while the Democrat campaign has started a fundraising effort to fight the legal action.
Analysts previously predicted that a drawn out election with a disputed result would be the “worst case scenario” for investors as it would be “highly disruptive” to markets.
In 2000, a recount in the George Bush versus Al Gore election left the outcome in limbo for weeks and the S&P 500 fell 8 per cent over one month.
Kevin Boscher, chief investment officer at Ravenscroft, said: “Somewhat surprisingly, given the consistent lead shown for Biden and the Democrats in recent polls, the election has proved to be too close to call and we are now in the worst position of all, a contested outcome with lots of uncertainty.
“At this point, both the Presidential election and control of the Senate remain in the balance.
“This is potentially bad news in the short-term for the US and global economies, and financial markets.”
imogen.tew@ft.com
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