SYDNEY (Reuters) – Asian stocks rose nearly three-year highs on Thursday and bonds extended their bursting rally as investors rallied against the U.S. dollar. The policy would greatly increase the likelihood of a gridlock in favor of some industries while restricting government engagement.
The risk of a long-running election remained high, although the count was moving smoothly ahead of the Democratic challenger Bn Biden in the major states.
T. Randall Jennick, portfolio manager at Roy Price, said that while the U.S. The official outcome of the election is unknown, but Biden’s victory remains difficult and the Republican Senate retains control.
“This result has always been seen as a ‘Goldilocks X season’ for financial markets – there is no radical policy change and the Fed provides enough liquidity to support the economy and financial markets when needed.”
The split government will block monetary stimulus and any ‘radical policy changes’ that will boost growth stocks such as health care, IT and consumer discretion.
MSCI’s comprehensive index of Asia-Pacific stocks outside of Japan has reached its highest level since February 2018. Japan’s Nikkei rose 1.7% to a nine-month high and South Korea’s 2.4%.
Chinese blue chips rose 1.3%, prompting Biden to ease the White House trade war tariffs.
The S&P 500’s e-mini futures are up 0.6% and the Nasdaq futures are up 1.4%. EurostaxX 50 futures gained 0.3% and FTSE futures gained 0.25%.
Both President Donald Trump and Biden are preparing to get 270 electoral college college votes, as the states have the tallest number of mail-in. Biden remained optimistic about winning when Republicans came forward to sue and demand accountability.
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Betting sites led to Biden, who began the results, previously favoring Trump.
Democrats, however, were less likely to win the Senate, and Biden should take over the White House, pointing to Deadlock.
“Biden’s victory without full Senate support means lower risk of regulation and higher corporate / personal tax risk,” analysts at Nomura wrote in a note.
“Asset market reactions over the past 24 hours confirm this view, US 10-year yields are declining rapidly, and US tech / WFH / structural growth stocks are pushing the prospect of lower financial support.”
Big to win bonds
Bond markets assume that a split government will greatly reduce the likelihood of debt-funding spending on stimulus and infrastructure next year, and therefore a lower bond supply.
At one point on Wednesday, the 10-year Treasury yield fell 0.9 %%.
The overnight decline of 11 basis points was the only major move of the day after the panic in the March COVID-19 market.
As the Federal Reserve and Bank of England hold policy meetings, the U.S. The declining opportunity for monetary stimulus will force central banks to apply liquidity globally.
Both could be interesting given the need for central banks to do more, said Chris Bouchmp, chief market analyst at IG.
“In particular, the Fed will have to play its QE role again, with a sigh of relief, to provide another bridge in the future, when hopefully, the government stimulus package will be agreed.”
After an overnight wild ride, re-focused on making the Fed easier. The dollar index last stood at .393..362૨, which is very close to 93.93.7070 compared to the high of 94.94.308 on Wednesday.
Similarly, the dollar stabilized at 104.38 yen shortly after hitting 105.32 overnight. The euro held well below the low price of 1.1734 held at 17 1.1732.
Sterling had its own difficulties.
Bank of England on Thursday raised its already large bond-buying stimulus by a further 150 150 billion (194 194.61 billion) to a total target of 5 895 billion as it slammed Britain’s struggling economy in protest of another coronavirus lockdown. Is.
The Telegraph newspaper had earlier reported that the BoE was considering moving into a negative interest rate.
The pound was down 0.3% at 29 1.2941 from its overnight peak of 1.3139.
All talk of easing policy put a floor under gold prices, with the metal shed closing at 90,909.1 per mercury.
Oil prices turned slightly profitable. They jumped overnight on speculation that a dead U.S. The government will be unable to pass environmental laws that would favor other types of energy. [O/R]
US crude fell 878 cents to 38.37 a barrel, although it rose 4% on Wednesday, while Brent crude futures fell 80 cents to 40.43 a barrel.
Graphic – Asia Stock Markets: Here
Graphic – Asia-Pacific Evaluation: Here
Additional reporting by Koh Gui King and Swati Pandey; Edited by Sam Holmes and Mr. Navaratnam
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