Stock markets oscillated between gains and losses on Wednesday, as investors reacted with unease to the first presidential debate between Donald Trump and Democratic candidate Joe Biden.
The president and his challenger held their first televised debate on Tuesday evening. The New York Times said the debate was characterised by “cross talk, lies and mockery” and “unravelled into an ugly melee.”
Investor attention has zeroed in on the US presidential race this week. With less than 40 days to go, the outcome is likely to determine the future path of the world’s biggest economy.
European stock markets and US futures fell in early trade on Wednesday. Analysts said answers given by Trump fuelled fears of a contested result in November.
Watch: Trump v Biden — the seven defining moments of the US presidential debate
“The US futures moved higher during the debate as investors saw Joe Biden showing his strong position against Donald Trump, but the Dow Jones took a complete U-turn after the debate because investors believe that if Trump loses the election, the transition of power is not going to be smooth,” said Naeem Aslam, chief market analyst at Avatrade.
“The presidential debate reinforced market concerns that Trump isn’t going to accept his defeat that easily.”
By mid-afternoon, anxiety had eased. European markets had pared back losses and Wall Street opened higher.
Even as the jitters from the first debate ease, investor attention is likely to remain firmly focused on US politics.
Kiran Ganesh, a multi asset strategist at UBS Global Wealth Management, said: “Although there was little of substance on policy, the bitterness of last night’s debate does perhaps increase the chance of a contested election.”
He added: “Historically there hasn't been any correlation between the results of election debates and subsequent elections, and this debate certainly did not clarify the election outcome, or provide any meaningful information for investor positioning.”
Stocks were mixed in Asia overnight. Japan’s Nikkei (^N225) fell 1.5% and Australia’s ASX 200 (^AXJO) dropped 2.3%. In China, the Shanghai Composite (000001.SS) fell 0.2% and the Shenzen Component (399001.SZ) was flat, while the Hong Kong Hang Seng (^HSI) rose 1%.
Watch: Americans react following first presidential debate