In mid-afternoon trading, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is up 1.2% it appears on the back of increasing likelihood of a Hillary Clinton win in the US election.
The markets have been falling over the past month or so as investors guessed what the election of Donald Trump as president would mean. In simple terms, it probably wouldn't be a good thing for global growth and therefore companies and stock markets.
But the news appears positive today after Clinton was cleared by the US Federal Bureau of Investigation (FBI) of any wrongdoing by using a private email server. The odds of a Trump victory now appear long – although not zero.
With the shock Brexit outcome still fresh in investor's minds, it wouldn't be impossible for Trump to win.
Should Clinton win on Wednesday – Australian time (Americans go to the polls on Tuesday, November 8), today's rise could be the start of a new bull market. It's certainly one less thing for investors to worry about.
An increase in confidence could also see companies express their trust by expanding operations, spending more and hiring more staff. Consumers could also start spending more of their cash – which retailers would be no doubt be euphoric about.
Those moves could start to generate stronger economic growth worldwide, and allow central banks to begin raising interest rates back to more 'normal' levels.
Australia's big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) would certainly be much happier, as credit growth has dropped dramatically in recent years. Forced to raise capital through equity raisings has also seen earnings per share drop – and when that happens, share prices tend to fall.
November 7 could be the start of an early Santa rally.
