Share market’s ‘fear-mongering’ pace to fall in history’s second biggest election week


According to Dow Jones market data, a closely watched gauge of stock-market volatility is on track as its biggest weekly decline and second-worst skid in the week of the presidential election since 2016.

Cboe Volatility Index VIX,
-8.33%,
Or VIX, down nearly 32% this week at 26.02, ending last week at 38.02. For the biggest weekly decline since February 16, 2018, it holds the VIX, often referred to as Wall Street’s fear gauge, that move, decreasing on February 16, 2018 and during volatility metrics The 37.05% seen keeps close to the weekly decline. The week that Donald Trump shocked Democratic challenger Hillary Clinton to win the 2016 presidential battle.

The VIX offers trading options on the S & P 500 SPX.
0.05%
Measuring expectations for stock unrest in the coming 30 days, and futures pegged to the VIX, suggested that volatility would increase for the bout between President Trump and former Vice President Joe Biden to close if won Have you seen. 2020 race for White House.

Market participants had long announced a Biden victory and a divided Congress, which looks like the most likely outcome for markets as a near-term recessionary scenario.

However, investors seemed to reevaluate the prospects of a divided Congress, which is now seen as reducing the possibility of corporate-tax hikes from which Biden should win the presidency. The former vice president has an edge over Trump in Georgia and Pennsylvania in recent counties, and he was a pioneer in Arizona and Nevada, putting him within striking distance of the 270 electoral college votes needed to claim the presidency.

Equities, which typically move in the opposite direction to the VIX, as investors use it as a hedge against the expected drop in the stock, have been tearing up this week.

Dow Jones Industrial Average DJIA,
-0.14%
The Nasdaq Composite Index comp, up nearly 7% so far this week,
+ 0.10%
It has risen nearly 9%, while the S&P 500 index has risen 7.3%.

Dow jones market data

Keith Lerner, chief market strategist at Suntrust Advisory, says that during an election year the probability of fluctuations increases in October and thereafter except in 2000, when former Vice Presidents Al Gore and George W. The contest between Bush was still unclear.

SunTrust Advisory Services, Inc.

In this case, although the outcome of the election has not yet been announced, and may not be for days, investors have warmed up to Biden’s prospect as the winner and the congressional structure, with the hope that COVID -19 The epidemic will eventually end and any kind of fiscal relief package will be prepared regardless of the election result.

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