Accessibility links

Breaking News

U.S.: Financial World Upbeat Despite Uncertainty In Election

Uncertainty is one of the things most hated by businessmen -- and the current U.S. presidential election is creating exactly that. While incumbent George W. Bush was ahead in the count, a decisive victory hoped for by both sides after yesterday's election failed to materialize.

Prague, 3 November 2004 (RFE/RL) -- Although the finish of the U.S. presidential election looks messy, the financial world appears already to have made up its mind who will win: incumbent George W. Bush.

Senior economist Manuela Preusehl at Deutschebank Research in Frankfurt told RFE/RL, "A least it looks like Bush has won the race, the first results in most of the states indicate this, and my feeling this morning is that the markets take the victory of Bush already as a kind of fact."

The financial markets mostly reacted positively despite the fact that momentum to choose a winner in the election slowed down today over the vote count in the state of Ohio. Now, it's not entirely certain who will win or when the winner will be known.

Despite the delay, the buoyant behavior of the financial markets -- outside the United States -- indicate that much of the economic world sees Bush as a relatively safe bet.

Britain's leading FTSE 100 share index climbed today to just below its highest level in more than two years. And European shares likewise rose to six-month highs in a display of confidence. Shares in Asia also rallied.

Economist Richard Batley at the investment firm Schroders in London cautions, however, that prices on financial markets could start falling if it appears that a long and protracted election dispute is in store. Batley was referring to the long period of uncertainty following the last U.S. presidential election in 2000 in the state of Florida, when the validity of the voting there was disputed.

As of midday today, it was still possible for Kerry to win. Preusehl said this could take the market by surprise in the coming weeks, and prices could dip. But even then she does not see any major disruption. "It is not evident that there [was] a major differences in economic policy, at least as indicated in the programs of the candidates, so even if there was a surprising outcome and after some weeks, Kerry was to be the new president, there will be no really major shift in economic policy in the United States," she said.

Oil prices rose to over $50 a barrel on the news Bush had taken the election lead. Financial experts explain this by pointing out that a Bush reelection would likely lead to continued high U.S. demand for fuel. This in turn would increase anxiety over the availability of sufficient supplies, particularly from the Middle East.

[For reaction from around the world to the U.S. presidential election, see RFE/RL's webpage "World Reacts To U.S. Election".]