A clean sweep of Democrats allows them to adopt large spending policies that could benefit the economy, investors say.
Global stock markets rose and bonds fed losses on Thursday in anticipation of a growth-fueling big-loan, big-spending Democratic administration after the run-off election that gave the party control of both houses of the US Congress.
On Wednesday, U.S. Treasuries suffered their biggest selloff in months after the Democratic Party’s two-race victories in Georgia state gave them tight control over the Senate and the power to pass their platform.
US S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.9% as markets appeared to shake a late fade that pulled Wall Street indices to new record highs when the chaotic protests in Washington, DC, baffled traders.
The largest MSCI index for Asia-Pacific stocks outside of Japan rose 0.8% to a record high, led by a 2.6% jump by the South-heavy chipmaker Kospi. Korean, and by a gain of 1.8% by the Australian ASX 200, heavy for miners and banks. .
Japan’s Nikkei rose 2% to its highest level since 1990. FTSE and European futures rose slightly.
“It’s basically a reflation operation,” said Mathan Somasundaram, director of Sydney-based research firm Deep Data Analytics, who added that the Democratic sweep was unexpected by most investors and “changes a lot.”
“Even if it’s a razor thin margin, it gives Democrats a two-year window [to pursue their agenda], “he said.” Anything that benefits from the price hike will work fine … when you look at the policy parameters they’re trying to stick to, it’s about printing [money for] Main Street, not Wall Street. “
Wednesday’s bond sell-off pushed the benchmark 10-year US Treasury yield above 1% for the first time since March. It hit 1.0507% on Thursday.
The US dollar also sank as the outcome of the runoff election became clearer. Currency traders believe that large and growing US trade and budget deficits will weigh on the greenback.
The dollar hit an almost three-year low against the euro of $ 1.2349 and hovered near that level on Thursday. It also fell to multi-year lows against the Australian and New Zealand dollars and the Swiss franc.
Chaos on the Capitol and repression in China
The exuberance has been tempered by some sales of tech stocks, as investors expect the sector to face taxes and regulations, and disturbing scenes of protesters storming the U.S. Capitol to disrupt the certification of Donald Trump’s electoral defeat in November. At least four people have died in clashes with security forces.
Wall Street emerged from session tops as police evacuated policymakers and struggled for more than three hours to clear the Capitol of Trump supporters.
“Which give[s] a little pause is that the economy is still very fragile and I think the Democrats are unlikely to have as easy a time as the markets are trying to predict by adopting some of these policies, ”said Tim Chubb, chief responsible investments in wealth advisor Girard in Pennsylvania.
Congress met again to resume the election certification process. Twitter shares slipped slightly after regular US transactions when the social network said it had temporarily locked Trump’s account for breaking platform rules.
Meanwhile, the US crackdown on Chinese companies appears to be deepening, with sources telling Reuters news agency that the Trump administration is considering extending investment bans to tech giants Alibaba and Tencent.
Shares of both companies fell more than 4% in Hong Kong, and shares of three Chinese telecommunications companies that the New York Stock Exchange finally decided to remove after a week of flip-flops also fell sharply.
Oil prices hovered near a 10-month high, basking in the lingering aftermath of a production cut promised by Saudi Arabia. Brent futures were up 0.7% to $ 54.69 per barrel and US crude futures were up 0.9% to $ 51.07 per barrel.
Gold was flat at $ 1,917 an ounce and the company Bitcoin after hitting a new high of $ 37,785.