• President Trump and rival Biden clashed in a chaotic shouting match.
  • Biden's initial lack of sharpness may boost tighten the elections.
  • Trump's refusal to accept the result and embrace of white supremacists increase the chance of violence.

70% annoyed, 30% entertained – that is one of the results in instant polls following the first presidential debate. Media outlets may have different ways of covering the debate, yet the word "chaos" has been repeated in many of them. 

President Donald Trump kicked off the debate by bulldozing challenger Joe Biden in a range of attacks, some deeply personal. At first, the Democrat was not sharp enough and responded with insults of his own.

People often remember the beginning and the end of any experience, and if this holds here, Trump may have succeeded in narrowing the gap. Ahead of the debate, Biden had a substantial lead over the president, and many considered the debates as the president's chance to hit back.

While markets usually prefer Republican, pro-friendly presidents, they also prefer certainty. A tighter race adds to uncertainty. In 2020''s case, it also increases the probability of an inconclusive election. Trump refused to say if he would accept the results. That opens the door to disputed elections and a constitutional crisis.

While fellow Republicans would force him to concede in case of a landslide victory for Biden – considered a 10% gap in the popular vote – he may fight hard and claim fraud if Biden's victory is narrower.

A disputed result could trigger a recount and be litigated, repeating the scenario in 2000, when Florida was eventually decided by 537 votes in Florida. However, 2020 could see the elections fought over on the streets. Late in the debate, Trump refused to condemn white supremacists and even mentioned one group by name. He asked them to "stand back and stand by" – in what can be seen as a threat of violence. 

Most voters have already made their minds and the 90-minute televised clash is unlikely to have made significant waves. Nevertheless, the debate raises the chances of a contested election – a detrimental outcome for markets. 

S&P futures are down in the wake of the debate and could continue deteriorating, regardless of what snap polls say about who won the acrimonious mud-slug. 

Moreover, the bad blood also lowers the odds of Congress agreeing on a new fiscal stimulus deal. The time window was already narrowing ahead of the vote and as both parties are set for a battle over nominating a Supreme Court Justice. 

See 2020 Elections: How stocks, gold, dollar could move in four scenarios, nightmare one included

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