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Good morning and welcome to our ongoing coverage of the global economy, financial markets, the eurozone and business.
Donald Trump often proclaimed stock market gains as proof that he was doing a good job. But today, the Biden rebound is in full swing as investors welcome the outcome of the US presidential election.
European stock markets are headed for a strong open, up more than 1%, amid hopes that US-EU relations will improve once Joe Biden enters the Oval Office in January.
The UK’s FTSE 100 is on track to hit its highest level in more than three weeks, following a rally in Asia-Pacific that has already pushed Japan’s Nikkei to a 29-year peak.
IGSquawk
(@IGSquawk)Is this what they call a relief rally?
European opening calls:#FTSE 5985 + 1.27%#DAX 12680 + 1.60%#CAC 5039 + 1.56%#AEX 581 + 1.43%#MY B 19977 + 1.50%#MOUNTAIN GOAT 6951 + 1.18%#OMX 1843 + 1.29%#STOXX 3252 + 1.51%#IGOpeningCall
Biden’s victory offers markets some certainty (which is always nice), while his promise to unify America suggests a return to calmer days.
Your promise to fight the Covid-19 pandemic in the United States is very welcome – a new coronavirus task force is being convened today.
The Democrat is also likely to take a less belligerent line on foreign policy, giving business leaders more confidence to invest abroad. Trade negotiations could also be less volatile, although relations with China could still be tense.
Fundamentally, investors are also optimistic that negotiations on a desperately needed stimulus package can resume to help American families battling the pandemic.
Jim Reid from German bank told clients this morning:
Since Election Day, Senate Majority Leader McConnell has been more open to a stimulus deal. This change in tone increases the chances of a lame duck pack and could hint at the possibility of a somewhat larger stimulus agreement than originally thought without a “Blue Wave.”
So they keep your current baseline assumption of a tax package of about $ 750 billion legislated in the first quarter even though they were previously concerned about this in a divided government setting.
In fact, the next president is likely to face a divided Congress, unless Democrats can win two Senate runoff elections in January to tie the upper house 50:50 (with a casting vote).
If Republicans maintain their current majority, it will be more difficult for the White House to push through major changes in tax and spending policies.
The prospect of stagnation is also boosting equities, says Mark haefele, chief investment officer at Global Wealth Management UBS.
In general, we take a pro-risk stance. We believe the best course of action is to operate under the assumption that the US elections are over and we expect the market focus to shift to medium-term drivers of economic growth.
These include COVID-19, vaccine developments, and monetary and fiscal stimuli. “
With Wall Street on track to recover, it could be a solid day for the markets. We will follow all the action …
The agenda
- 10.35 a. M. GMT: Bank of England Governor Andrew Bailey speaks at the London Corporation Green Horizon Summit
- 14:00 GMT: Bank of England Chief Economist Andy Haldane talks about ‘The economic impact of the coronavirus and the long-term implications for the UK’
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