And finally, Wall Street has closed sharply higher tonight, as investors position themselves ready for the election results.

The Dow held onto its earlier gains, closing 554 points higher at 27,480 - a gain of just over 2%.

The broader S&P 500 index also ended in the green, up 1.8% or 58 points at 3,369.

The tech-focused Nasdaq also jumped 1.8%, up nearly 203 points at 11,160.

So, that’s two days of solid gains on the New York stock market, in the run-up to a most eagerly awaited election results.

As Derek Halpenny, head of research at MUFG, puts it:

“The markets in the last 48 hours have become a bit more convinced of a Biden victory without the messy risk of weeks of uncertainty and turmoil.”

By tomorrow, we may know whether they were right.... In the meantime, keep tracking events here. GW

It’s lunchtime in New York, where the stock market is holding onto its earlier election day gains.

The Dow, the S&P 500 and the Nasdaq are all up around 2% today, with financial stocks, industrial companies, consumer cyclicals and technology shares leading the rally.

US Treasury bond yields are also continuing to climb, as investors anticipate a large fiscal stimulus package -- meaning higher borrowing.

Eric Vanraes, portfolio manager at Eric Sturdza Investments, points out that the election is not a ‘done deal’....

Biden is supposed to win but it’s not a done deal. And there are many uncertainties around the outcome for the Senate.

If Trump wins (still possible), it means bullish equity markets and corporate bonds. Treasury yields and the slope of the curve would be more or less unchanged

If Biden wins (the most likely scenario but…), it would mean initially a steeper US Treasury curve and higher long term yields (less if GOP win the Senate, more if Dems win the Senate).

China’s leaders have also given the markets a boost today, says Guardian economics writer Phillip Inman.

While the Shanghai stock exchange jolted investors by halting the Ant Group’s $37bn listing, China’s communist party leadership said they would step up “counter-cyclical adjustments to the macro economy”, which is another way of saying they will pump extra funds into the economy to protect firms and households during a rocky time for global trade.

Striking a more expansionist tone than in recent months, party officials were also reported to be seeking the more widespread use of China’s currency – the yuan – and safeguarding Chinese companies’ legal interests overseas.

While the yuan is traded in London and other markets, its adoption as a currency alongside the dollar, the euro and the pound has been slow.

The official Xinhua News Agency said communist party officials, in a series of recommendations for economic and social development over the next five years, would step up research efforts to develop a sovereign digital currency, which most western countries have put in the back burner this year while the tackle the Covid-19 pandemic.

Emphasising the hard-won nature of China’s economic success, president Xi Jinping was quoted as saying that Beijing was aware the country faces a significant increase in risks, including unpredictable risks, from health issues and the introspection affecting many countries, some of which “have adopted unilateralism and protectionism”.

To emphasise the party’s commitment to driving economic growth, he said China will declare in the first half of 2021 that it has achieved the goal of turning the country into a moderately prosperous society.

David Madden, CMC Markets analyst, says the US election has helped investors look beyond the Covid-19 crisis:

Equity markets are enjoying a very bullish move today as the US presidential election has taken centre stage, and for now it has eclipsed the health crisis and the restrictions.

Stocks are building on yesterday’s gains as an absence of negative news has assisted the mood. The non-stop headlines about the battle for the White House has acted as a nice distraction from what is going on in terms of tighter restrictions.

Stocks enjoyed a very positive move yesterday and that sentiment has been carried into today. In London, it was a broad-based rally, as banking, house building, transport, travel, commodity and hospitality stocks are showing gains.

Here’s our news story on the dramatic suspension of Ant’s record-breaking stock market float:

Today’s rally across European stock markets suggests optimism that the US election will deliver a clear result - with the polls signalling that Joe Biden is on course for victory.

But, as Connor Campbell of SpreadEx points out, investors could get a shock overnight:

You would think the result of Tuesday’s Presidential election – one that carries so much more weight than usual given the nature of the incumbent and the state of the global economy – is a forgone conclusion based on the actions of investors.

Anticipating a blue wave, the markets went all in on a green tsunami, the boards a luscious shade of emerald as the Western indices continued to aggressively rebound from their nightmarish end to October.

That they fell so fast and hard last week is undoubtedly a contributing factor to the size of Tuesday’s gains. But the main thrust of trading is based on the assumption that Joe Biden is headed for victory – 2016 shocks, mail-in vote delays, and nefarious Republicans bedamned!

The danger for the markets – and it is a very real danger – is that they are going to wake-up with a HELL of a hangover on Wednesday if the result is anything but a decisive, and stimulus-signalling, victory for the Democrats.

All the major European markets have rallied strongly, in a burst of risk-on trading.

This has lifted the Europe-wide Stoxx 600 index up by over 2.2%, away from last week’s five-month lows.

• German DAX: up 300 points or 2.55% at 12,088
• French CAC: up 114 points or 2.4% at 4,805
• Italian FTSE MIB: up 586 points or 3.1% at 18,986
• Spanish IBEX: up 166 points or 2.5% at 6,751

The US bond market is still signalling that investors are anticipating a swift deal on a major new economic stimulus package.

As flagged earlier, bond yields are at four-month highs today. That indicates traders are pricing in more fiscal spending (meaning more borrowing, and more inflation).

Reuters has the latest details:

U.S. Treasury yields marched higher on Tuesday as the market braced for potential volatility on Election Day due to uncertainty over the results.

Americans headed to the polls to decide whether incumbent Republican President Donald Trump or his Democratic challenger Joe Biden will be elected president.

The benchmark 10-year yield, which earlier rose to 0.887%, its highest level since June, was last up 3.6 basis points at 0.884%.

Yields on two- and five-year notes also reached multi-month highs earlier in the session.

Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, pointed to the potential for “a significant amount of volatility” in the market as some traders have positioned for Democrats to win the White House and control of Congress in the election.

“In that scenario of a blue sweep, there is an expectation of a larger fiscal package and that would indicate additional supply as well as boost the prospects for reflationary pressures to reemerge,” he said.

After an hour’s trading in New York, US stocks are continuing to rally.

The Dow is now up 594 points, or 2.2% at 27,519 -- its highest level in a week. The S&P 500 is up 2%, with the Nasdaq 1.8% higher.

With an hour’s trading to go in London, the FTSE 100 index is still showing strong gains.

It’s still up 2% or 117 points at 5772, a one-week high, and its best day since early September.

Our economics editor Larry Elliott writes:

Share prices in the City are on course for their biggest daily gain in two months amid investor hopes that a Joe Biden victory in the US presidential election would result in a major new stimulus package.

Despite the imminent start of a new nationwide lockdown in England on Thursday, financial markets believe Biden will defeat Donald Trump as part of a Democrat clean sweep of the presidency and both houses of Congress.

The City is also expecting the Bank of England to support activity with an announcement on Thursday of at least £100bn of fresh money creation through its quantitative easing programme....

Economic data takes a back seat when there’s an election.

But we should note that US factory orders rose in September, a little faster than expected, but not as rapidly as immediately after the spring shutdown ended.

Factory orders rose by 1.1% during the month, up from 0.5% in August, partly due to strong demand for transportation equipment (cars, boats, planes..).

However.... Alibaba is certainly not rallying.

Shares in Alibaba are down 9% after its planned $37bn flotation of payments arm Ant was dramatically suspended by regulators a couple of hours ago.

Banks are leading Wall Street higher in early trading, with JP Morgan jumping 2.7% and Goldman Sachs up 2.1%.

Consumer-focused stocks are also on the rise, with Coca-Cola gaining 1.7%, Walt Disney rising by 1.3% and Walmart up 1.2%.

Every stock on the Dow Jones is up, although tech stocks are lagging behind (Apple is up 0.4%)

Back in New York, investors are still anticipating a solid start to election day trading.

US. stock futures are sharply higher, with the Dow Jones Industrial Average pointed up 384 points (+1.4%).

Analyst Tom Essaye of The Sevens Report warns that the rally would unwind if election doesn’t provide a clear result.

“Ultimately, the markets want clarity, and the main threat to risk assets this week is the emergence of a contested election, so if races are tight enough for campaigns to sue to halt or extend recounts, expect a reversal of this morning’s rally,”

In New York, stock market traders are preparing for a tense Election Day’s trading as Americans heads to the polls.

The Dow Jones industrial average is set for a strong start; now up over 400 points in the futures markets, or 1.5%.

That follows today’s gains in Europe and Asia-Pacific markets, on top of the Dow’s 423-point rally on Monday.

Stephen Innes, Chief Global Markets Strategist at Axi, says there is “a festive ‘risk-on” mood’” in some markets, with traders anticipating a potential Blue wave.

I think if a US election result is declared this week, with an orderly concession from the defeated candidate, and since the markets are sufficiently oversold into the event, look for the election relief rally to extend.

Of course, the rally’ construct will differ depending on who wins the presidency and what party controls the Senate/House.

Commodity prices are also rallying today, with aluminium hitting an 18-month high.

Reuters reckons it’s another sign that the markets are expecting a good night for the Democrats, paving the way for a growth-boosting stimulus package.

Industrial metals rose alongside stock markets and oil prices on Tuesday as investors bet on Joe Biden to win the U.S. presidency, with strong manufacturing data and signs of tighter supply pushing aluminium to an 18-month high.

A Democratic sweep of Tuesday’s U.S. election could pave the way for increased government stimulus. The dollar also weakened, helping metals by making them cheaper for non-U.S. buyers.

Benchmark three-month aluminium on the London Metal Exchange (LME) was up 1.3% at $1,890.50 a tonne by 1220 GMT after hitting its highest since May 2019 at $1,892.

Prices could retreat as new coronavirus resrictions slow economic growth in Europe and elsewhere, said Nitesh Shah, an analyst at investment manager WisdomTree.

With stocks up strongly, Treasury yields rising, and the US dollar down, the market may already priced in a Democrat clean sweep.

So argues Neil Wilson of Markets.com, who also predicts volatility as election results roll in.

The mentality right now is to buy the dip ahead of the election.

Is this greater confidence about a Biden win, or simply a bit of buying on oversold conditions from last week’s decline? It’s hard to really say – the election looms and we are expecting volatility as results come through later. Certainly a clean result on the night is what markets are hoping for – whether it’s Biden (higher yields, Value positive) or Trump.

Yesterday, the S&P 500 rallied over 1.2% to reclaim its 100-day simple moving average at 3310 by the close. Value sectors prospered and led tech, perhaps on expectations of a Biden triumph leading to stimulus and infrastructure spending.

The yield, or interest rate, on US government debt has risen this morning.

The 10-year Treasury yield nudged 0.88% at one stage, slightly over last Friday’s four-month high.

Yields move inversely to bond prices, so this indicates that investors are selling Treasuries in favour of riskier assets such as equities.

Treasury yields have been rising slowly but steadily since August, having plunged when the Covid-19 pandemic began as investors piled into the safety of US debt.

The FT wrote last week that the recent selloff was partly due to hopes of a huge stimulus package, which could be inflationary.

The shift out of Treasuries in recent weeks has been fuelled by the rising prospect of a so-called “blue wave” at next week’s US election, a scenario where the Democratic party wins the presidency and both houses of Congress.

Some investors have placed bets that the bigger fiscal stimulus expected under a Biden administration would mean a stronger recovery, pushing up inflation expectations — and forcing bond yields higher.

More here: Treasury sell-off reignites question: how high can yields go?

But still, yields are very low by historic standards - and the economic damage caused by the pandemic means its hard to see inflation rising too quickly, let alone the Federal Reserve raising interest rates or withdrawing its stimulus measures.

A Biden victory could push the pound higher against the US dollar, if the Democrats also win the Senate, argues Jeremy Thomson Cook, chief economist at Equals Money:

“In brief, a ‘blue wave’ result - which would see Joe Biden and the Democrats win the White House, Senate and the House of Representatives – is likely to have a negative impact on the strength of the US dollar, but a positive one on the pound, at least in the short-term.

“If we see a gridlock result - which would see Biden winning the White House, Democrats winning the House of Representatives, and Republicans retaining the senate - it’s likely the US dollar would strengthen. Similarly, if Trump is re-elected and retains his place in the White House, the US dollar is likely to rise higher, while the pound would fall.”

“The ‘blue wave’ is what most pollsters and analysts have pointed towards, but of course nothing is certain, and uncertainty is one of the biggest causes of volatility for currency.”

US stocks are expected to rise when trading begins on Wall Street, in around four hours:

Mohit Kumar of Jefferies reckons the battle for the Senate could be worth $2tn in potential stimulus measures:

In terms of market impact, a clear result should be positive for risk sentiment, irrespective of a Biden or Trump win.

From a fiscal stimulus perspective, as we have argued before, the Senate elections are as important, if not more, than a Presidential one. A ‘Blue Wave’ with Biden as the President and Democrats having control of both the House and the Senate would see a fiscal stimulus of over $3trn.

However, if we have a Republican Senate, the fiscal stimulus is unlikely to exceed $1trn, irrespective of the President.

This morning’s rally in Europe follows a strong day’s trading for shares in the Asia-Pacific region.

China’s CSI 300 index gained 1.2%, and Hong Kong’s Hang Seng jumped by nearly 2%, while Australia’s S&P/ASX 200 rose 1.9% after the RBA slashed interest rates to record lows.

The equity markets are pricing in the increased odds of “a Biden win and a blue wave,” says Hong Li, head of US equity quantitative strategy at Citigroup.

He explains (via the FT)

“Timely and clear election results will remove one of the two major risks for the equity market and may bring a clearer picture of the potential stimulus package.”

Conversely, unclear or tardy results would muddy the picture, and probably spook the markets...especially if the result is contested.

As Tom Kenny, senior international economist at ANZ, puts it:

“We expect numerous litigation battles, particularly if the race is tight.”

The European stock market rally is holding firm.

After over an hour’s trading, the Europe-wide Stoxx 600 index has gained 1.2% to 351.94 points, with solid gains in London, Frankfurt, Paris, Milan and Madrid.

That’s a one-week high, back to levels just before France and Germany announced new Covid-19 lockdown restrictions.

As you can see, this is lifting the Stoxx 600 away from last week’s five-month trough. But it’s still down 15% this year, with the FTSE 100 having lost 24% of its value.

John Hardy, head of FX Strategy at Saxo Bank, warns there could be ‘considerable volatility’ as the US election outcome becomes clear... particularly if the result is contested.

Finally, it is U.S. Election Day, and although many official pollsters suggest very high odds of a Biden victory and the Democrats retaking the U.S. Senate, there are sufficient doubts on the outcome to make the election results a surprise to many.

A contested election result tonight is rightfully seen as the most negative scenario, as it could drag out the uncertainty for weeks or longer.

Australia’s central bank has also cheered the markets today, by cutting interest rates to a record low and launching a new stimulus package.

The Reserve Bank of Australia has slashed its official cash rate to a new historic low of 0.1%, in an attempt to revive the economy. It is also boosting its quantitative easing programme by $100bn.

My colleague Ben Butler has the details:

In what its governor, Philip Lowe, billed as a “package of further measures to support job creation and the recovery of the Australian economy from the pandemic”, the RBA also said it would wade deep into the bond market, buying $100bn of government bonds from banks over the next six months by printing money in a quantitative easing program.

The bond purchases would not directly fund the government but would lower the cost of government borrowing and “the cost of finance for all other borrowers in Australia”, Lowe said on Tuesday.

We have a blue wave in the City this morning, as every sector of the FTSE 100 rallies.

UK housebuilders are leading the charge in London, after home construction firm Crest Nicholson reported that profits will be above expectations this year.

Mining stocks - a bellwether of economic confidence - are also posting gains, along with energy companies and banks.