SYDNEY (Reuters) – Stocks jumped, oil prices jumped and the dollar remained weak on Monday amid expectations of fewer regulatory changes and more monetary stimulus under US President-elect Joe Biden, fueling risk appetite.
The Democratic candidate’s victory in the US presidential election has been largely appreciated by the markets, which have been trading with the views of the Biden presidency and the Republican-dominated US Senate since last week.
E-mini futures contract for the S&P 500 SC1 It jumped more than 1.5% on Monday while Nasdaq futures NQc1 It rose by over 2%, signaling a positive start for the US markets.
The MSCI Asia Pacific Index is widest outside of Japan .MIAPJ0000PUS It jumped 1.3 percent to 613.95 points, the highest level since January 2018. It jumped 6.2 percent last week, to its best weekly performance since early June.
Dave Wang, portfolio manager at Novin Capital in Singapore, said: “While a lot of attention was paid to Trump versus Biden, markets reacted strongly to the (potential) split in Congress, which means more confidence that interest rates will be lower for a longer period. “.
The best opportunities now lie within emerging market sectors, particularly China and North Asia. I think the earnings and valuation momentum are putting China in a very attractive risk / reward position. ”
Chinese stocks started higher with the CSI300 Leading Index .CSI300 It rose by 1% in the hope of improving trade relations between China and the United States under Biden.
Japan .N225 It was up 2% while Australia’s major indices rose .AXJO, Hong Kong HSI And South Korea .KS11 They earned 1.7% each.
Stocks rose strongly last week, with the S & P500 .SPX Up 7.3%, the best election week gain since 1932, according to National Australia Bank analyst Tapas Strickland.
However, Matt Sherwood of Australian fund manager Perpetual said that a Biden victory did not necessarily guarantee a change in his portfolio.
“Ultimately, we believe that the US economy is still somewhat fragile and that growth is slowing,” Sherwood said.
“Your portfolio is likely to draw in higher experimental type markets, such as emerging markets, and there is potential for better energy outlooks than was the case with the sweep of the Clean Democrats.”
Oil prices jumped on Monday as investors cheered Biden’s victory, ignoring concerns about weak demand amid mounting global coronavirus cases. [O/R]
Brent Crude LCOc1 Added $ 1 to $ 40.48.
Analysts have warned that the path could get tougher from here as investors focus on Biden’s ability to expand financial incentives and measures to curb the spread of COVID-19.
The United States saw a record number of new coronavirus infections last week, with the total number of cases approaching 10 million.
US-based wealth manager Jim Wilding at Confluence Financial Partners in Pennsylvania added a word of caution with the S&P 500. .SPX Not far from all-time highs and stock valuations are generally at high levels.
He pointed out that “while we remain positive about the medium-term outlook and believe that the divided government reduces the chances of a bear case scenario, we refrain from unbridled enthusiasm at current levels.”
Analysts said the fiscal stimulus is still possible despite the divided government, although the possibility of a larger package is less likely. This highlights the US Federal Reserve to do more to support the world’s largest economy.
As a result, the dollar weakened USD = In recent days while growth agents like the Australian dollar Australian dollar = They rallied with the Biden presidency, which is unlikely to be a showdown over trade.
The dollar was mostly steady against the Japanese yen Japanese Yen = At 103.31, after dropping 1.3% last week.
The Australian dollar is up 0.2% after jumping 3.3% last week.
Investors will also focus on the British pound and the euro this week, with trade negotiations between the UK and the EU reaching a climax with the EU summit on November 15th.
Later in the day, the Chief Economist at the Bank of England will deliver a speech on “The Economic Impact of Coronavirus and Long Term Effects on the UK”.
euro EUR =, Which rose 1.9% last week, was bullish on Monday at $ 1.1887. Sterling pound Pound sterling = It rose to $ 1.3183.
(For a graphic in the Asian stock market: Performance, clickHere
Covered by Swati Bandy in Sydney; Additional reporting by Tom Westbrook and Michelle Price. Edited by Daniel Wallis and Sam Holmes
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