SYDNEY (Reuters) – Wall Street stock futures started strong on Monday, while the dollar extended its declining stance as risk assets bolstered expectations of lower regulatory changes and greater monetary stimulus under US President-Elect Joe Biden.
The Democratic nominee’s victory in the US presidential election was largely in the markets, trading with a view of a Biden presidency and a Republican-controlled US Senate last weekend.
E-mini futures for S&P 500 ESc1 It jumped 0.6% on Monday, indicating a positive start for US markets.
MSCI’s Asia Pacific’s largest index is outside Japan .MIAPJ0000PUS To see its best weekly performance in early June, it rose 0.1% after climbing 6.2% the previous week.
Jim Wilding, wealth manager at Confluence Financial Partners in Pennsylvania, said, “The divided government at this point seems to provide continuity to the current environment rather than the possibility of major sweeping changes.”
“We see that this is a net positive for equity markets, especially in this scenario it reduces the odds of higher taxes in the coming years,” he said.
Wielding added a word of caution with the S&P 500 .SPX Not from far-off highlands.
“As long as we stay positive on the intermediate-term outlook and believe that divided government reduces the likelihood of a bear case scenario, we will avoid unbridled enthusiasm at current levels,” said Wilding.
Equities fought hard last week with the S&P 500 .SPX According to Tapas Strickland, analyst at National Australia Bank, up 7.3%, achieving the best gain in an election week since 1932.
However, Australian fund manager Sada Kay Matt Sherwood said Biden’s win did not necessarily add to his portfolio.
“In the end we think the US economy is still quite fragile and the pace of growth is slow,” Sherwood said.
“You can potentially expand your portfolio more towards emerging markets, such as high-beta type markets, and in the case of a Democrat clean sweep there is a possibility of better prospects in the energy space.”
Analysts also warn that the road could be difficult from here as investors focus on Biden’s ability to expand fiscal stimulus and take measures to reduce the spread of COVID-19.
The United States saw a record number of new coronovirus infections last week, with the total number of cases close to 10 million.
A fiscal stimulus plan is still possible despite a divided government, analysts said, although the possibility of a larger package is slim. This puts the spotlight on the US Federal Reserve to do more to grow the world’s largest economy.
As a result, the dollar has weakened USD = In recent times, while growth is behind the scenes like the Australian dollar AUD = Biden has rallied with the presidency, seen less likely to clash with trade.
Dollar was weaker against Japanese Yen JPY = At 103.25, after slipping nearly 1.3% last week.
The Australian was up 0.3%, jumping 3.3% last week.
Investor’s focus will also be on Sterling and Euro this week. The UK-EU will hold an EU summit on 15 November with trade talks.
Later in the day, the Chief Economist of the Bank of England will deliver a speech on the topic ‘Economic impact of coronavirus and long-term impact for UK’.
The euro Euro =, Which climbed 1.9% last week, was a shade higher at $ 1.1887 on Monday. Actual GBP = At $ 1.3146 a shed was weak.
Skipped dollar index = USD From 0.1%.
Commodity oil prices eased slightly after losses on Friday but fell below $ 40 per barrel in rising global coronavirus cases. CLc1LCOc1
Gold spot rose 0.36% to 1,958.7 per ounce. XAU =
Reporting by Swati Pandey; Additional reporting by Tom Westbrook and Michelle Price; Editing by Daniel Wallis and Sam Holmes