FTSE 100 plunges as stock markets take hit during US election turmoil

"I fail to see how Trump can mount a serious legal challenge in the Supreme Court against states counting all the ballots cast. This is about delegitimizing a Democrat win and has the whiff of desperation.”

Alastair George, chief investment strategist of Edison Group, said: “Trump’s actions at this stage also reveal his internal concerns about the outstanding votes, highlighting that the electoral race for President remains wide open despite Trump’s better than expected result. 

“Unfortunately, the probability of a contested result cannot be excluded given the multiplicity of ways that a close result could be challenged in the US courts. 

"We believe Biden’s campaign is no less well legally-armed which means that a close contest will inevitably be challenged by either side which could lead to months of delay and more importantly the risk of policy paralysis at a critical time for the US economy. It is this result which we believe investors should be prepared for, even if they may be atypically indifferent to the success of either of the candidates.”

Michael Hewson, chief market analyst at CMC Markets UK, said: " All of those expecting to see a blue wave sweep for the Democrats, have quickly seen this notion disabused as early results come in, with the Republican vote holding up fairly well, and in areas where you wouldn’t normally expect.

"The failure of the Democrats to capture the states of Texas and Florida, which they had high hopes of seizing control of, is likely to see the eventual outcome of this 2020 vote go to the wire, as the votes continue to get counted across the US. The Republicans appear to have also held onto Ohio.

"Financial markets, which had been hoping for a swift outcome after the uncertainty of the last few weeks are currently taking the failure of the Democrats to open up a clear lead in their stride, however that could change if we don’t start to see a clear outcome by the end of the week.

“Despite these setbacks the route to the White House is still open for Joe Biden, however there is the increased prospect that a failure to regain control of the Senate will make him a lame duck President, if he makes it over the line. This means any new fiscal stimulus is likely to be a lot smaller than would have been the case with a blue wave. ” 

"An uncertain outcome may not be the end of the world, as divided governments also mean that politicians will need to compromise to get things done, however the optimism of earlier this week is starting to get scaled back somewhat, particularly in bond markets.