[Good Morning Stock Market] "Uncertainty in US Presidential Election Gradually Resolving"

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] As Joe Biden, the Democratic candidate, is likely to win the U.S. presidential election, the U.S. stock market continued its upward trend. The market rallied on expectations that political uncertainty would be resolved earlier than initially anticipated.

On the 5th (local time) in the New York stock market, the Dow Jones Industrial Average closed at 28,390.18, up 542.52 points (1.95%) from the previous day. The Standard & Poor's (S&P) 500 index rose 67.01 points (1.95%) to 3,510.45. The tech-heavy Nasdaq index surged 300.15 points (2.59%) to close at 11,890.93.

In the domestic stock market, opinions are divided between analyses that the possibility of increased uncertainty is weakening as some state courts dismiss lawsuits from the Trump camp challenging mail-in ballots, and the need to prepare for situations as high volatility may continue due to the risk of Trump’s contestation.

◆ Sang-young Seo, Kiwoom Securities Researcher = The Korean stock market surged sharply the previous day, supported by large-scale net buying of cash and futures by foreigners as Biden’s victory became more certain. Especially, the fact that the relationship with China is not based on unilateral tariff impositions and pressure policies like under President Trump increased the attractiveness of the Korean stock market, which is highly dependent on exports, having a positive impact. Despite President Trump’s continued election contestation, even if it goes to court, it is a time-limited risk factor, and the fact that some state courts have consecutively dismissed lawsuits from the Trump side has weakened the possibility of increased uncertainty, which is also positive. These factors influenced the U.S. stock market today as well, with financials and industrials leading the rise, driven by expectations of active stimulus measures. The Korean stock market is expected to start flat due to some profit-taking following the previous day’s rise, with differentiation by sector and stock expected thereafter.

◆ Nam-joong Moon, Daishin Securities Researcher = As the election progresses, the counting of mail-in ballots is favoring Biden, and since Trump continues to file lawsuits challenging mail-in ballots on the grounds of fraud, the possibility of a repeat of the 2000 43rd presidential election crisis (allegations of election fraud) has increased. If the situation is not resolved quickly, there is a possibility of scenarios such as the Electoral College vote being impossible on December 14, the next president remaining undecided until January 19 next year when Trump’s term ends, and the Speaker of the House acting as president.

◆ Yeon-ju Jo, NH Investment & Securities Researcher = The election contestation situation could be another risk factor for the stock market as it may prolong political strife and delay additional economic stimulus measures. In the Korean stock market, strong exports to the U.S. in September and October have been a major driver, but concerns about economic slowdown due to delays in additional U.S. stimulus could negatively affect the Korean stock market. For the time being, investors may oscillate between hope and anxiety depending on news flow related to the U.S. presidential election.

This content was produced with the assistance of AI translation services.