Valbury Capital Ltd is a London-based multi-asset broker with a particular focus on Asia. Philip Ball, trader at Valbury Capital Ltd has been watching the markets overnight.  

“The immediate market reaction was a sell-off in US equity futures which was surprising. We’ve seen that recover but it indicated that the market had already factored in an Obama victory. From the point of view of equities, it may be simply a case of ‘buy the rumour and sell the fact’. Selling pressure in the US dollar has given a boost to commodities and global equity markets elsewhere. However the result has taken away a great deal of uncertainty and investors may well resume their "risk on" mentality soon. US equity futures initially traded as much as 50 basis points lower but have since retraced all of those losses.”

“Focusing on the Asian markets, the initial reaction to Obama’s victory was different. As the US markets went lower, the Asian markets benefited from the fall in the US dollar. But from then on it’s been pretty much a case of all quiet on the Eastern front.  Markets across the region are muted. They’re higher but remain exceptionally quiet. Asian markets are broadly firmer, but more in response to gains made in yesterday's session than the Obama victory.”

 “Looking ahead, the key is volume. Volumes over the past week have been significantly below the norm for this time of year.  The fact that we have had this uncertainty over the US elections has given many investors a reason to wait on the sidelines and stay in defensive safe haven assets such as bonds.  Now we have a result, that excuse has gone so we may see investors start to step back into stocks and commodities. Technically a lot of the major global indices are at a crossroads. A significant move now in either direction, on better volume, could finally reveal the longer term trend in the markets.“ 

From Jakarta, Valbury’s Head of Research Nico Jonckheere said, “The Indonesian stock market seems to be reacting quite positively to the news that Obama has secured a second term as the President of the United States. Obama spent some years of his childhood in Jakarta and Indonesia has enjoyed a productive trade and economic relationship under Obama’s US administration.  Economists have referred to Obama’s ‘strategic pivot towards Asia’. The fact that Ben Bernanke is now less likely to be replaced as Chief of Federal Reserve has reassured investors. In the region, there was concern the US might terminate its monetary easing policies which would not only affect the global economy but also Indonesia.”

 “There was a small but notable uptick in China's Shanghai composite. Regional investors will feel relief that the US is now less likely to start a trade war with China. Romney had repeatedly said that he would declare China as a currency manipulator, if elected as US President.”

Mark Hanney, CEO of Valbury Capital Ltd commented, “Overall there’s relief but no euphoria among investors in Asia and Europe this morning. This is reflected in markets that are basically flat. Investors remain in ‘wait-and-see’ mode. What they now want to see is how the President is going to tackle the crucial US financial issues.”