NEW YORK (Reuters) - Global banks and investors said they were stepping up their preparations for a victory by Democratic presidential candidate Joe Biden after his rival Republican President Donald Trump revealed he had tested positive for COVID-19 early on Friday. The development was the latest dramatic twist in an extraordinary election year that had many banks and investors planning for no clear winner on Nov. 3 with a global market panic expected to ensue, Reuters reported Wednesday. By Friday, they were quickly shifting gears on the basis that Trump’s positive result would deal a blow to his campaign and lessen the overall chances of a contested election outcome. “Trump contracting the coronavirus will elevate institutional money’s preparation for a Democratic White House and all the tax, trade and budget implications that go along with it,” James McDonald, CEO of Los Angeles-based fund manager Hercules Investments wrote in a note. “We expect institutional investors to start de-risking portfolios and increasing hedges in preparation for market volatility.” Oil prices dropped on the news and stocks saw an initial selloff in a volatile morning trading session. Major banks have been running simulations to ensure they can cope with a spike in market, liquidity and credit risks in case of a contested election or even a constitutional crisis. One senior capital markets banker said on Friday that their institution was still stress testing for all scenarios, but that it had tilted the focus of the simulations more towards a clear Biden victory and what that would entail in terms of volatility and hedging strategies. “This increases Biden’s chances and reduces the chance of lawsuits and recriminations,” said another banker. The bankers declined to be identified because the internal plans are private. Biden, who tested negative for COVID-19 on Friday, has a nine-point lead over Trump following their combative first debate on Tuesday, according to a Reuters/Ipsos poll published Thursday. The White House said on Friday that the president was displaying mild symptoms and was self-isolating with first lady Melania Trump who also tested positive. His campaign said it was rescheduling or postponing several planned events. It was unclear if the next television election debate scheduled on Oct. 15 would still go ahead. One of the bankers added that Trump"s predicament would shift the election focus back towards the pandemic and away from the U.S. economy, a signature policy for Trump on which he had led Biden in approval ratings. In a further blow for the president, U.S. employment growth slowed more than expected in September, Friday data showed here. “He’ll be losing valuable time to campaign and it brings the issue that he’s dismissed right back front and center,” said another major investor. “He has been trying to put the COVID topic in the rear view mirror and now it comes right back as topic number one.” Even with the risk of a contested election abating, some investors said they were still planning for heightened volatility. “I don’t think volatility suddenly disappears right after the election,” wrote Jason Brady, President and CEO at Thornburg Investment Management, a New Mexico-based asset manager with $41 billion in client assets. “Up and down markets will be with us into December and January as second order effects from the transfer of power with a new administration – or tweaks to an existing one – get priced in.”