(Bloomberg) — With Joe Biden’s lead widening in the polls and President Donald Trump’s campaign sidelined by the virus, investment strategists now say there’s less of a chance for a contested election.A clear-cut Democrat victory could avoid a long and messy legal battle and provide certainty to markets that have been nervous about election risks, according to strategists from Citigroup Inc. to JPMorgan Chase & Co.S&P 500 futures pointed to a day in the green, havens including bonds are seeing little demand and the greenback is down.“Markets seem have lowered the chance of prolonged uncertainty post-November 3,” Barclays Plc strategists Ajay Rajadhyaksha and Shawn Golhar wrote in a note Sunday. “Given that Vice President Biden has been ahead in most polls, this suggests that markets are assigning a bit more probability to his win and a bit less to a close and contested outcome.”JPMorgan Says a Biden Victory Could Mark a Shift in Stock MarketCross-asset traders are taking the newsflow in their stride, despite confusion over the president’s condition and more positive tests from Republican leaders. A poll released Sunday — taken between Tuesday’s debate and Friday’s news of the president’s infection — found that Biden’s national lead had leaped to 14 points, from 8 before the debate. Biden also has set two records for monthly fundraising in August and September, giving him enough money to dominate Trump on the airwaves.Barclays strategists point to a currency pair like the Aussie dollar versus the yen, a proxy for risk appetite. Its one-month implied volatility dropped to the lowest in weeks after the presidential debate. It has since rebounded, but remains below its 200-day average.The bank’s dollar-neutral Biden currency basket has also risen in recent days, a sign of rising confidence in the former vice-president’s prospects.Volatility markets have been pricing in risks from the election for months now, raising the bar for bad news to hit trading.When it comes to futures tied to the Chicago Board Options Exchange Volatility Index, contracts for the coming three months are all trading above the one expiring in January, signaling investors are expecting wilder equity swings around the election.But a weekend of confusion over Trump’s state of health has not deepened such anxieties. October’s contracts, which cover the polling date, are down 2% on Monday after jumping nearly 5% on Friday.On the betting market PredictIt, the chance of a Biden win stands at 64%, a tiny drop from a peak of 66% the day before Trump’s positive test was announced. A long-short strategy betting on Biden’s triumph compiled by Nomura Holdings Inc. and Wolfe Research has hardly moved since reaching a record high on Thursday.That confidence, combined with a continued economic recovery, will help support equity markets — and potentially even a rotation into riskier shares, according to Evercore ISI.“Passage of fiscal package 4 plus a Democratic sweep would be a significant support for value and cyclicals near term,” strategists led by Dennis Debusschere wrote in a note Sunday.If Trump’s conditions deteriorate, investors might start to wonder if the election could be postponed or who would run for the presidency in his place. But judging from financial markets’ reaction so far, that remains far from traders’ radar.“Our baseline – of a risk-supportive macro outlook despite election uncertainty – will not change unless the president’s health unexpectedly takes a worse turn,” the Barclays strategists wrote.Of course, there’s still no shortage of debate over whether Democratic or Republican policies would be better for investors.
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