• Australian trading is expected to remain at high volumes as the US election kicks off.
• Vic Jokovic, CEO of exchange Chi-X, told Business Insider that record trading this year would only be made more volatile this week as ballots are cast in the US.
• While the outcome, and its impact, can only be speculated at, investors will be watching closely to see how the market might swing.
• Visit Business Insider Australia’s homepage for more stories.

In a year where share trading has hit unprecedented heights in Australia, and around the world, the US Presidential election could be about to pour fuel on the fire.

With Americans having now cast their votes in favour of Republican incumbent Donald Trump or Democrat Joe Biden, knowing the final outcome is now just a matter of counting ballots.

The continuation of Trump or his replacement with Biden will help shape the next four years of American policy, its impact on not only individual companies but entire markets.

Investors accordingly are watching closely, according to Vic Jokovic, CEO of Australian stock exchange Chi-X.

“The entire market, all the exchanges, are expecting heightened volatility. With everything driven electronically these days, everyone has been testing capacity,” Jokovic told Business Insider Australia in the leadup to the election.

This year’s race has all the ingredients to be particularly volatile, with a President who has been publicly sceptical of mail-in votes, and indicated he may declare victory before an official result is returned.

“You’ve got an election, and the volatility that can create, and then you’ve got Donald Trump who you can never know what he’s going to do and what might happen with the election result, so we’re expecting a lot of volatility,” Jokovic said.

He’s been proved right so far. The US market had its worst week since March before the Dow Jones rebounded strongly on election day.

At home, Australian trades are flying and have been throughout the pandemic.

“These are volumes that the Australian market hasn’t seen before, with hundreds of thousands of new investors in the Australian market,” Jokovic said. “Ourselves and the ASX have been busier than ever.”

To put that in perspective, a busy day in Australia typically might see 3 million or so trades. On March 13, when pandemic jitters really kicked off, that volume surged to 7 million.

“We’re seeing a huge divergence in the performance of different sectors and stocks like we’ve never seen before,” Jokovic said.

“Markets tend to move in unison around a big event like the GFC, or 9/11, but COVID has produced the complete opposite. It’s incredibly difficult to predict.”

Age and ethnicity apart, the two candidates are seen as offering dramatically different propositions as the leader of the free world for the next four years.

Opinion is, unsurprisingly, divided over what impact either winner will have on the broader market.

“Whether that sees the market go up or down will depend on the result and how that is interpreted, but what I can say for sure is that it’s going to be a heavy trading week,” Jokovic said.

Some high-profile investors have speculated Biden’s tax bill may hurt businesses both in the US and abroad and may spell the end of the US bull run higher.

The world’s largest fund manager Blackrock disagrees and says smaller companies will do particularly well out of a Biden presidency, and a so-called ‘blue wave’ Democrat victory.

Closer to home, the Australian market could do better under a Biden scenario.

“Non-US equities [would] likely outperform in a Democratic clean sweep scenario because non-US equities are more operationally leveraged, suffer less from higher US corporate taxes or US wage costs and would benefit from better trade relations,” Credit Suisse analysts wrote in a research note.

Legendary investor Warren Buffett has said the result doesn’t matter in the grand scheme of things, while others are expecting markets to rally no matter who wins, as investors are lured back in.

However, with votes in some states likely to take weeks to count, and Trump casting aspersions on the mail-in voting, a tight race could see markets jump wildly for some time yet.

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