Asian markets extended gains Tuesday as Americans
prepared to vote in one of the most keenly watched elections ever,
with traders betting on a Democratic sweep of the White House and
Congress that would likely see a huge new economic
stimulus.
Joe Biden has maintained his healthy lead over Donald Trump in
national polls for weeks as the president is buffeted by his
handling of the coronavirus, which is seeing a resurgence across
the country.
A Democratic takeover of Capitol Hill “is the key to unlocking
Congress’ ability to deliver significant fiscal stimulus and
benefit the US and global markets at a time of need”, said Axi’s
Stephen Innes.
The US is in dire need of a fresh rescue package as the disease
flares up again, threatening an already stuttering recovery in the
world’s top economy, with lawmakers having failed to agree anything
despite months of haggling.
However, while investors are broadly betting the former vice
president will win, his advantage in key battleground states is
narrowing slightly, while there is also a worry Trump will contest
the result — having spent months hitting out at mail-in voter fraud
— leaving the country in limbo.
Observers said trading floors were nervous as investors
remembered Trump’s surprise win in 2016, and with many positioned
for the “blue wave” of Democratic victories to take control of
Capitol Hill, any other outcome could jolt sentiment.
“It’s pretty much a binary outcome,” Quincy Krosby, at
Prudential Financial, said. “The question is, is the market right
now looking at a Biden victory? And will it be disappointed if we
don’t have that?”
Note of Optimism
Still, others point out that the economy is set to get a fresh
injection of cash whoever wins the election, while Edward Moya at
OANDA pointed out that the Federal Reserve’s ultra-easy monetary
policy continues to provide support and will do for years to
come.
He added: “The race for a Covid vaccine and treatments should
have some winners in the next couple of months and that should
provide optimism that the global economic recovery will only get
better starting now.”
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After last week’s rout, Wall Street bounced back Monday, with
Innes saying that a positive performance in the travel and leisure
sector indicated fears over the new wave of infections may have
been priced in.
European markets also rallied, despite several top economies
including England, France, Germany and Italy going into lockdown or
some form of strict containment.
Hong Kong rose more than two per cent, having jumped more than
one per cent Monday, while Sydney piled on 1.9 per cent after the
Australian central bank slashed interest rates to a record low and
ramped up its bond-buying scheme as it looks to kickstart an
economic recovery.
Singapore and Seoul also rallied 1.9 per cent, while Shanghai,
Mumbai, Taipei and Bangkok were more than one per cent up. Jakarta,
Manila and Wellington were also positive.
Tokyo was closed for a holiday.
And Gorilla Trades strategist Ken Berman sounded a positive
note, saying “the bullish long-term trends remain intact, and the
ongoing economic recovery should also provide tailwinds for stocks
in the last two months of the year”.
Oil prices held Monday’s gains, after tumbling to four-month
lows over recent days on demand fears. The commodity was boosted by
news that Russia was considering extending a production cut agreed
with OPEC this year by another three months.
Key figures around 07:10 GMT
Hong Kong – Hang Seng: UP 2.2 percent at 24,994.63
Shanghai – Composite: UP 1.4 percent at 3,271.07 (close)
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: UP at $1.1662 from $1.1639 at 2050 GMT
Dollar/yen: DOWN at 104.67 yen from 104.76 yen
Pound/dollar: UP at $1.2930 from $1.2918
Euro/pound: DOWN at 90.18 pence from 90.23 pence
West Texas Intermediate: DOWN 0.1 percent at $36.76 per
barrel
Brent North Sea crude: DOWN 0.3 percent at $38.86 per barrel
New York – Dow: UP 1.6 percent at 26,925.05 (close)
London – FTSE 100: UP 1.4 percent at 5,654.97 (close)
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