However, full results are unlikely on election night due to an expected surge in postal voting because of the pandemic.
“The fact that equities are paying close attention to the election is evident in the sharp kink in the VIX futures curve around the election,” said Marion Laboure, a Deutsche Bank analyst.
“Equities have historically gone sideways ahead of the election as investors buy protection in the option space against potential volatility around the election.”
Critics of Mr Trump fear he will use any results delay or disputed votes to challenge the election’s validity. Last week the President refusing to commit to a peaceful transition of power if he loses. However, he was later slapped down by top Republicans, including Senate leader Mitch McConnell, who promised an “orderly” transition.
“The most unpleasant scenario for the markets in the US presidential election on November 3 would be an unclear outcome,” said Bernd Weidensteiner, economist at Commerzbank.
The court battle that followed the 2000 election between Al Gore and George W Bush did not lead to severe volatility but this time “political chaos would hit markets”, he said.
Amid the deepening political divide in the US, it is “not entirely clear whether the side that ultimately loses will take the decisive step to calm the situation, namely to openly concede the election”. Mr Weidensteiner added that the US dollar in particular would suffer.
US stocks have hit new heights amid the pandemic, responding mainly to record levels of stimulus the Federal Reserve has injected into the economy.