U.S. stocks rallied toward records, oil surged past US$45 and the dollar fell as the formal start of President-elect Joe Biden’s transition spurred investors into risk assets.
The Dow Jones Industrial Average climbed to 30,000 for the first time, led by a 5 per cent rally in Boeing Co. The S&P 500 jumped more than 1 per cent. Back-to-normal stocks led the gains. Carnival Corp. surged 9 per cent, MGM Resorts International added 7 per cent and Planet Fitness Inc. jumped 8 per cent. The Russell 2000 rose almost 2 per cent and is on track for its best month ever.
Energy companies in the S&P 500 surged 4 per cent after oil topped US$45 a barrel in New York for the first time since March 6. Bitcoin rallied past US$19,000. The dollar weakened versus major peers and Treasuries slipped. Gold fell toward US$1,800 an ounce.
“The market has room to run but on the premise that investors are trying to rotate into these undervalued areas of the market and more into the value play rather than the technology,” Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, said by phone.
Stock markets globally trended higher after the General Services Administration acknowledged Biden as the apparent winner of the presidential election. The move reduces political uncertainty in the U.S., giving Biden and his team access to current agency officials, briefing books, some US$6 million in funding and other resources. Markets also cheered his plan to nominate former Federal Reserve Chair Janet Yellen to lead the Treasury Department.
“Markets love certainty and the move by Trump overnight partially removes ambiguity over the presidential succession,” Jeffrey Halley, a senior market analyst with Oanda Asia Pacific Pte, wrote in a note. “A Biden administration is expected to be much less isolationist, with hopes that the U.S. will reengage on global trade and improve relations with China.”
Wall Street is also viewing a possible Yellen appointment as reason to count on more economic stimulus. She recently said the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. That’s fueling the rotation out of defensive technology stocks and into assets that have been hardest hit by the pandemic, such as airlines and energy producers.
In other markets, gold dropped to a four-month low and the dollar weakened against its major peers.
In New Zealand, the government proposed adding home prices to the central bank’s remit to rein in an overheating property market. The move has prompted investors to reduce bets on lower interest rates, pushing the kiwi to the highest level since June 2018.
In Germany, the operator of the DAX index announced the biggest overhaul since the index’s inception in 1988. The number of members will increase to 40 from 30 and new quality criteria will be imposed on both existing and prospective members.
These are the main moves in markets:
Stocks
The S&P 500 Index rose 1.4 per cent as of 11:39 a.m. New York time.
The Stoxx Europe 600 Index rose 0.6 per cent.
The MSCI Asia Pacific Index rose 0.9 per cent.
The MSCI Emerging Market Index was little changed.
Currencies
The Bloomberg Dollar Spot Index fell 0.3 per cent.
The euro climbed 0.2 per cent to US$1.187.
The British pound gained 0.1 per cent to US$1.3333.
The onshore yuan was little changed at 6.586 per dollar.
The Japanese yen was little changed at 104.54 per dollar.
Bonds
The yield on 10-year Treasuries jumped two basis points to 0.87 per cent.
The yield on two-year Treasuries increased less than one basis point to 0.16 per cent.
Germany’s 10-year yield gained three basis points to -0.56 per cent.
Japan’s 10-year yield climbed one basis point to 0.025 per cent.
Commodities
West Texas Intermediate crude surged 4.7 per cent to US$45.07 a barrel.
Brent crude climbed 1.6 per cent to US$47.845 a barrel.
Gold futures weakened 1.9 per cent to US$1,809.30 an ounce.
