European stocks climb and Dow futures rise 400 points on U.S. election day

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European stocks advanced on Tuesday for a second day, gaining ground as American voters head to the polls to choose the leader of the world’s largest economy.

Up 1.6% on Monday, the Stoxx Europe 600 SXXP, 1.41% rose 1.6%.

The German DAX DAX, 1.58%, the French CAC 40 PX1, 1.86%, and the U.K. FTSE 100 UKX, 1.61% each rose over 1%. European markets rise as U.S. votesRegional indexes advance on Tuesday.Source: FactSetAs of Nov. 3, 6:15 a.m. ETFTSE 100 IndexCAC 40 IndexDAXOct. 21Nov.-12-10-8-6-4-202 %

Futures on the Dow Jones Industrial Average YM00, 1.50% rose 389 points, after a 423-point gain for the blue chips DJIA, +1.59% on Monday. Besides election positioning, manufacturing surveys from China, the eurozone and the U.S. all surpassed expectations. The Reserve Bank of Australia cut interest rates and announced it was buying A$100 billion of bonds.

But the focus is on the election. Former Vice President Joe Biden has a polling lead against President Donald Trump, and the Democrats are expected to take control of the U.S. Senate in a so-called blue wave. Traders will be looking not just to see who wins but also whether the result is readily apparent.

“Based on recent polls, we calculate there would need to be an ‘on the day’ swing 7x larger than that which occurred in favor of Donald Trump in 2016 for the president to get the same share of the popular vote as he did in 2016,” said London-based strategists at Credit Suisse, led by Andrew Garthwaite.

For markets, other than an unlikely Republican sweep, the best result would be a Democratic sweep with 54 Democrats in the U.S. Senate, so that they can eliminate the filibuster rule, the strategists said.

A Biden victory with a Republican Senate could limit a second stimulus to as little as $500 billion, they added.

Shares of BNP Paribas BNP, 6.02% rallied 7% as the French bank reported a stronger-than-forecast third-quarter profit, with revenue, costs and provisions all beating estimates.

BP BP, 2.95% and Royal Dutch Shell RDSA, 2.11% gained ground, with Shell upgraded to overweight and BP upgraded to neutral by Morgan Stanley.

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