EUROPE and Asia’s stock markets climbed and bonds extended their rally on Thursday as Democrat Joe Biden inched closer to winning the White House and Britain’s central bank become the latest to shovel in additional stimulus.
Biden is now favoured to oust Donald Trump after victories in Michigan and Wisconsin, but Democrats are unlikely to win the Senate. That led investors to wager on a policy gridlock that would prevent greater regulation.
With the Bank of England adding 150 billion pounds ($195.20 billion) to its bond-buying programme as Europe’s markets opened, the FTSEurofirst .FTEU3 was up 0.8 per cent and Italy’s five-year bond yields fell below zero. [EUR/GVD]
Asian stocks .MIAPJ0000PUS climbed two per cent overnight to reach their highest since February 2018.
Japan’s Nikkei .N225 rose 1.7 per cent to a more than nine-month top, South Korea .KS11 gained 2.4 per cent, and Chinese blue chips .CSI300 added 1.3 per cent on hopes a Biden White House would ease up on tariffs.
A split US Congress, while potentially limiting fiscal stimulus, would have some advantages, said Michele Pedroni, a fund manager at Decalia Asset Management in Geneva.
“The big bad wolf of regulation and taxes is further away from the door and many, who have de-risked into the event, will be forced to re-risk,” she said.
E-Mini futures for the S&P 500 ESc1 rose 1.6 per cent and NASDAQ futures NQc1 2 per cent after both real-time markets had surged on Wednesday as the election results unfolded.
Amazon AMZN.O, Facebook FB.O and Google GOOGL.O have all soared six per cent to eight per cent.
Both Trump and Biden have paths to 270 Electoral College votes as states tallied mail-in ballots. Biden remained optimistic on winning while Trump filed lawsuits and demanded recounts.
The divided Congress that looked likely to emerge was “often seen as the ‘goldilocks scenario’ for financial markets — no radical policy changes and the Fed providing ample liquidity to try to support the economy and financial markets when required,” said Randal Jenneke, a portfolio manager at T. Rowe Price.
– REUTERS
