LONDON / SYDNEY (Reuters) – Stock markets in Europe and Asia gained momentum and bonds pushed up their rally on Thursday as Democrat Joe Biden was close to winning the White House and Britain’s central bank became the latest to shovel in additional stimulus Gone.
Biden is now in favor of ousting Donald Trump after victories in Michigan and Wisconsin, but Democrats are unlikely to win the Senate. This led investors to place bets on a policy gridlock that would prevent over-regulation.
With the opening of European markets, the Bank of England added 150 billion pounds (195.20 billion dollars) to its bond buying program, FTSEFofirst .FTEU3 Italy’s five-year bond yields fell below zero, up 0.8%. [EUR/GVD]
Asian share .MIAPJ0000PUS Climbed 2% overnight to reach its highest level since February 2018.
Nikkei of japan .N225 At the top of nine months, South Korea rose 1.7% .KS11 2.4% and Chinese Blue Chips Received .CSI300 Hopefully, Biden will ease the White House tariff.
Michel Pedroni, a fund manager at Desalia Asset Management in Geneva, said a US Congress would have some advantages while limiting fiscal stimulus.
“The big bad wolf of regulation and taxes is away from the door and many, who are at risk in the event, will be forced to put themselves at risk again,” she said.
E-mini futures for S&P 500 Esc1 Rose 1.6% and NASDAQ futures NQc1 Both real-time markets gained 2% on Wednesday after the election results surfaced.
Adventuress AMZN.O, Facebook FB.O And google GOOGL.O All have increased from 6% to 8%.
Trump and Biden both have a path to 270 electoral college votes, as mail-in ballots are tallied. Biden remained optimistic on winning while Trump filed suit and demanded repurchase.
The divided Congress that looked likely to emerge was “often seen as a ‘goldilocks scenario’ for financial markets – no radical policy changes and the Fed needed to provide adequate liquidity when the economy and financial markets Is tried to support, ”Randall Janeke said. T. A portfolio manager at Rowe Price.
(For the latest election results and more coverage, click here)
Graphics: Growth in World Stock Market Cap in last four years:
BONDS Wins Big
Bond markets assumed that a divided government would reduce the likelihood of debt-funded spending on incentives and infrastructure next year, and thus lower supply of bonds.
Observed 10-year treasury yields fell to 0.74% US10YT = RRWednesday touched a five-month top of 0.93% at one level. The overnight drop of 11 basis points was the biggest single-day since the March COVID-19 panic.
The low probability of US fiscal stimulus will put pressure on central banks globally to inject liquidity.
The Bank of England added £ 150 billion to its total target of 895 billion as it sought to cushion Britain’s struggling economy against a second coronavirus lockdown.
In addition, the Federal Reserve will likely be called, too, said Chris Buechamp, chief market analyst at IG.
“In particular the Fed will again play its QE role with a tiring sigh, perhaps to provide another bridge in the future when, hopefully, a government stimulus package would have been agreed,” said Beauchamp.
Chance stopped the dollar, after an overnight wild ride. The dollar index stood at 93.362 = USD, A low of 93.070 on Wednesday compared to around 94.308.
Dollar also returned to 104.38 yen JPY = After rising overnight to 105.32. Euro was held at $ 1.1734 Euro =, From a low of $ 1.1602.
Sterling recovered after a bumpy ride on Wednesday amid his own troubles. Little signs of a breakthrough have appeared on Brexit, and the Telegraph newspaper previously reported that BoE was considering a move to negative interest rates.
Pound rises to $ 1.3023 GBP =, Still below the one-night peak of $ 1.3139.
All talk of policy easing brought down the gold prices, bringing the metal to $ 1,909.1 an ounce. XAU =.
Oil prices ran into some gains. They had jumped overnight on speculation that a dead US government would be unable to pass major environmental legislation supporting other forms of energy. [O/R]
US crude CLc1 Although slipped to $ 38.37 per barrel, it rose 4% on Wednesday. Crude oil LCOc1 The futures fell 80 cents to $ 40.43.
($ 1 = 0.7685 lb)
Additional reporting by Swati Pandey in Sydney