What’s happening: Key races that could determine who heads to the White House are still too close to call, including Arizona, Georgia, Pennsylvania, Wisconsin and Michigan. In some places, it could take days to count all the votes.
Breaking it down: Wall Street bet that former Vice President Joe Biden would win the White House and that Democrats would take control of the Senate, paving the way for a generous fiscal relief package during a difficult winter.
Credit Suisse told clients early Wednesday that the races for both the presidency and control of the Senate were “much tighter than expected.” It cautioned that the country may not have a definitive answer on whether President Donald Trump or Biden won until Friday.
“We expect volatility to remain elevated,” the bank said. “Amid the lack of clarity, patience is required.”
The biggest concern on Wall Street has been a contested election that takes days or weeks to resolve. That risk hasn’t gone away.
Such unsubstantiated claims only darken the market sentiment, according to ING chief international economist James Knightley.
“With Donald Trump clearly now pushing the case that this is going to be unfair, this is going to be challenged — that’s just going to make markets anxious this could [take] weeks,” Knightley told me.
But a drawn-out, divisive election makes passing such a package in the coming weeks unlikely, and could cause risky assets like stocks to pare back some of their recent gains.
“When you’ve got the animosity and arguments going on, it’s not exactly going to give you confidence [that] you’ll get politicians sitting around the table to hammer out a quick deal,” Knightley said.
If Congress can’t move towards an agreement, pressure will rise for the Federal Reserve to do more. The central bank, which meets Wednesday and Thursday, has assured the public it still has room to act after pushing interest rates near zero and snapping up trillions of dollars worth of bonds this year.
The Fed has made clear it doesn’t want to be the only game in town. Depending on how the election plays out, it may not have a choice.
China halts Ant Group’s historic IPO
Details, details: The Shanghai Stock Exchange said in a statement on Tuesday that it had postponed the company’s listing, less than two days before its shares were due to begin trading, because of “major issues” that might cause it “not to meet the listing conditions or disclosure requirements.”
The IPO has also been suspended in Hong Kong, according to a statement from Ant Group, which referenced the meeting between Ma and Chinese officials as well as “recent changes” in regulations. In a statement on its official WeChat account, Ant Group apologized to investors for “any inconvenience caused by this development.”
The dual listing of the Chinese financial tech giant was set to raise $37 billion, making it even bigger than Saudi Aramco’s 2019 IPO.
“There’s a saying in China: ‘The tallest nail gets hammered down,'” said Duncan Clark, author of “Alibaba: The House that Jack Ma Built” and founder of investment advisory firm BDA China.
The unprecedented intervention serves as a cautionary tale for Chinese entrepreneurs with lofty ambitions — even Communist Party members such as Ma. And even if Ant satisfies new regulatory requirements, its massive business will only move forward under the watchful eye of China’s regulators, which could limit growth.
Also today: The ISM Non-Manufacturing Index, a read of the all-important US services sector, posts at 10 a.m. ET. But for markets, the US election results will be the big mover.
Coming tomorrow: The Federal Reserve makes its latest policy announcement ahead of the US jobs report for October.