Global stock markets collectively rallied on Tuesday, as investors bet on an uncontested Democratic victory in the US presidential election.
Europe’s main bourses all rose for a second consecutive day, led by the Milan exchange in Italy which gained 3.2pc. Shares in Frankfurt, Madrid, Paris and London followed close behind, each adding between 2.3 and 2.6pc.
The continent followed Asia Pacific’s lead, after indices in the East ended trading with a sea of green across all the main bourses except Malaysia’s Kuala Lumpur. Among them China’s Shanghai Composite and Tokyo’s Nikkei both boosted 1.4pc, while Hong Kong’s Hang Seng index rose 2pc.
America also indicated optimism as its citizens headed to the polls, despite the election being one of the most controversial in decades. The S & P 500 gained 1.8pc by close, having been up more than 2.4pc in earlier trading.
Investors are expecting Joe Biden, the Democratic candidate, to fulfil his promise of a post-election economic stimulus package to aid a slumping US economy.
Chris Beauchamp, chief market analyst at IG, said: “It looks like markets have decided to remain calm about the US presidential election, as European stocks move sharply higher."
"The risk is that investors are getting ahead of themselves, given the potential for a long drawn-out battle over the result in coming weeks, should no obvious result appear by [tomorrow morning]. In that case, risk assets could well struggle to make much headway.”
Gains this week also come as traders attempt to remove chunks of recent losses. Last week’s sweeping sell-off wiped £72 billion from the FTSE 100 to conclude its worst month since March. Asian markets and Wall Street also fell sharply, while Europe closed marginally higher.
Tuesday's positivity points to just how poor market sentiment has been in recent weeks, noted Craig Erlam, senior market analyst, OANDA Europe.
Erlam said: “It seems the positioning ahead of the election has already been very risk averse, heavily aided by Covid lockdowns. So perhaps some investors are [now] sensing opportunity.”
Read more: US election 2020 results map