Uncertainty commonly has a serious effect on the financial markets. This is especially so with real-time futures trading due to the nature of the market. The personality of the future supports this idea. The asset is valued at its future value, not its present value. Any event that threatens the market’s projection is likely to shake the market dramatically.
Elections are the most important catalyst for future market turmoil. Whether the vote is decided by the head of state or by a public vote, it can affect the market, before, during, and after the process ends. Public opinion about the possible outcome of an election can affect the relevant futures market in several ways. However, the most common case is when the market enters a period of consolidation between fluctuations in upcoming outcomes.
The key to trading the real future
The impact of elections on the futures market is very diverse and unpredictable. Each market and election is unique, making it difficult to accurately predict outcomes and successive actions. Knowledge of politics, electoral systems, and general affairs is an important part of active futures trading. If you need more information on how to deal with market uncertainty, check out the extensive collection of live futures resources available on OneUp Trader.
The implication of the news of the election result for you and your money
The overnight market reaction after the presidential election suggests clearer results. Futures contracts linked to the Dow Jones Industrial Average are valued at a 390 point open similar to the reported rally during the eve of the presidential election. Contracts involving the S&P 500 reported an increase of 37 points at the beginning of the trading day. At the same time, Nasdaq’s Composite futures are priced valued at a decent 75 point return.
The US futures got a boost and the futures of the Asian market posted gains as the world awaits the outcome of the US election.
After falling earlier, at 22:25 Eastern Time on the Election Day, the Dow Futures rose by 0.6% and S&P 500 Futures rose by 1.6% as the electoral votes are being counted. Nasdaq futures increased by 3.5%. These Futures growth followed the strong development of regular trading on Wall Street.
In Asia, Tokyo’s Nikkei 225 index rose 330 points (1.4%) to 23,626 points at noon on Wednesday, a day after the presidential polls while the Seoul KOSPI index rose 20 points (0.9%) to 2360. The Hong Kong Hang Seng Index remained unchanged at 24,937. The Shanghai Composite Index moved higher by 0.1% to 3,274 points.
Investors hope that the end of the painful U.S. presidential campaign can alleviate the serious uncertainty that has recently circulated the market shortly. Markets around the world were shocked when Hillary Clinton took the lead in the 2016 presidential election of Donald Trump. The S&P 500 fell early the next day but closed at 1.1%.
Most of all, investors hope to see a clear winner of the election. Although due to President Trump’s hope for a legal battle, make potentially delay the announcement of a clear winner. Nonetheless, it’s less significant because it shows history that stocks tend to go up, no matter whether Trump or Biden takes over the White House.
The greatest fear of investors is the present election controversies. It has added a bit more uncertainty to the market. In this scenario, many Wall Street expect stocks to fall sharply. The future political composition of Congress is another factor that will have a substantial impact on the futures market uncertainty in addition to the timing of the COVID-19 vaccine.