Nasdaq futures collapse as investors brace for possible Blue Wave

(Reuters) – Futures tracked by the Nasdaq 100 index fell more than 1% on Wednesday as investors expected Democrats to win both races in a Senate run-off in Georgia that will determine the balance powers in Washington.

Edison Research called one of the races for Democrat Raphael Warnock, toppling Kelly Loeffler, while Democratic challenger Jon Ossoff held a slim lead over Republican David Perdue in the other with 98% of the votes counted.

A Democrat-controlled Senate would give President-elect Joe Biden more leeway to implement his reform plans, including the new COVID-19 stimulus, but it could also mean higher corporate taxes and tighter regulations on tech mega caps – policies that are generally not favored. by Wall Street.

“A ‘blue wave’ might not be a bad outcome for the markets as decisive fiscal action will help accelerate economic recovery,” said Vasu Menon, executive director of investment strategy OCBC Bank, Singapore.

“It will be broadly bullish for risky assets, particularly equities, credit, commodities and emerging market stocks.”

As of 2:06 am ET, Dow’s e-minis were up 89 points, or 0.29%. Blue-chip Dow Jones constituents should generally benefit from a pickup in economic activity.

The S&P 500 e-minis lost 5.25 points, or 0.14%, and the Nasdaq 100 e-minis were down 147 points, or 1.15%.

Hopes of a vaccine-driven economic recovery in 2021 had propelled major Wall Street indices to record highs by the end of December, but sentiment has recently been shaken by the discovery of a more contagious variant of the coronavirus and the latest restrictions.

Analysts also expect the market to consolidate December’s gains in January, as asset managers look to rebalance their portfolios that had been heavily biased towards equities.