The US election had a great impact on almost every business sector of the world.
Weeks ago everybody had been waiting impatiently to see how the situation would change after the 46th president of the world’s leading country would finally reveal and now everybody can have a look at how the worldwide scenario will develop.
The major changes in the financial markets around the world can already be felt after Joe Biden’s victory in the US presidential election. In fact, the EU markets jumped up a bit as the Biden win boosted the global stock markets. The main reason for this is that investors started seeing a bit more involvement from the US side in the local economy. The index of Great Britain has jumped up and shown the highest level in the last 4 weeks which is mainly because of the new political and economic situation of the world but as the Brexit talks still continue, the stock market hasn’t yet reached the stable level and may still face some issues in the near future.
What Brexit has to do with the UK stock market?
However, the success of the British market may not remain as the political atmosphere in the country is constantly changing. Recently Eyal Nachum, a famous fintech guru from Bruc + Bond has been warning investors that the Brexit talks are not yet over. The country has faced a lot of challenges after the government decided to follow the results of the referendum and leave the EU. From this time the world was questioning whether they would truly take such a big step or stay in the Union but now this concerning matter has finally come to an end as the decision is reached and Britain is leaving the Union (or has already left) but as Eyal Nachum believes, it’s too early to sit back and relax because there are still many details in the country’s post-Brexit existence that need to be worked out.
Though we must not forget that in just two months, the Brexit talks will be completely over and it looks like no deal will be struck. This could devastate the local markets in a way that no policies can help. It’s especially the case when it comes to currency-related issues. Levels of GBP haven’t been really satisfactory as it fell 16% against the EUR after the Brexit referendum. This decrease was due to the uncertainty that Brexit created for all the UK sectors including business, travel, migration, the legal system, and trading as well. The Pound’s volatility due to Brexit is a great headache even for licensed and regulated UK forex brokers as it became harder to satisfy traders’ needs and exchange currencies at the desired rate as a result of the problems in the UK marketplace.
Boost in the European Markets
According to the Guardian, the index of Great Britain jumped above the 6000 mark which is its highest level for the last month. But the UK is not the only market that finally faces some success after the COVID-19 lockdown. Recent data clearly shows that all the major European markets are increasing and the Stoxx 600 index in the whole of Europe rose by almost 1.5% in early trading. It should be noted that the current rate is the highest level since the middle of October and every single market in Europe has important gains, including Germany’s Dax and France’s Cac.
Therefore, world stock markets hit record highs after the US election but another great reason for this increase can be attributed to the development of the Covid-19 vaccine that is believed to be 90% effective. It may be one of the reasons why global shares reached a record high. How as Pfizer, one of the leading biopharmaceutical companies of the world, believes that the vaccine is so effective, the hopes are higher for the deadly coronavirus to finally end, and somehow hopefully its impact may not be as serious in the following months. As a result, global markets surge and investors hurry to buy stocks such as airlines, retailers, property companies, or pub chains.
If the vaccine really protects people from the transmission of the virus effectively, as it’s seen in the global trials that performed much better than it was previously expected, the British and not only the British economy may survive suffering and finally recover from the recent decreases. But of course, hopes for the effectiveness of the vaccine is not the only reason for increased stock markets and the US election results may be more important.
Although the current situation is relatively stable, the things may change anytime soon and we will only be able to see the real picture of the markets in the coming days and weeks. As for now, Trump is not showing any signs of conceding, and the Republican party is still willing to back up its claims about voter fraud which actually has no basis. But because of the instability in the political financial markets may face further challenges.
Most of the financial experts believe that the Wall Street opening will help the global stock markets gain further and rise consequently. Investors had been betting that Biden would find himself unable to push through any valuable fiscal stimulus. Probably the US federal Reserve will continue to borrow costs at their historically low levels and as a result, the interest rates will be lower for some time