Stocks rallied globally as investors rushed back into technology and health-care firms on bets that the U.S. election results will mean no major tax hikes or regulatory changes that would derail the sectors. The dollar weakened to the lowest level in more than two years.
The S&P 500 jumped more than 1 per cent for a fourth straight day and is headed for the best week since April. The tech-heavy Nasdaq 100 surged more than 2 per cent, pushing its advance this week around 9 per cent. Vote counting continues in four states, with Democrat Joe Biden needing to win just one to unseat President Donald Trump. Republicans are still expected to retain control of the Senate.
That outcome would produce a divided legislature that is less likely to pass a multi-trillion-dollar stimulus package. The dollar retreated the most versus the euro since March. Investors will turn attention to the Federal Reserve’s response to the potential status quo in Congress when it announces its policy decision at 2 p.m. in New York.
“Global risk-on sentiment continues as this marks yet another day of overwhelmingly positive action for equity markets,” said Yousef Abbasi, global market strategist at StoneX. “No change is expected from Powell and company — however, investors will be listening intently to see if any clarity on future plans emerge.”
Increases in tech shares and some strong corporate results buoyed the Stoxx Europe 600 index. Chipmakers including Dialog Semiconductor Plc were among the biggest gainers following an upbeat forecast from Qualcomm Inc. on demand for 5G devices. Uber Technologies Inc. and Peloton Interactive Inc. will release results after the close of U.S. trading.
Investors are banking on a split Congress to leave Trump’s corporate tax policy unchanged while pursuing lighter-touch regulation of the tech sector. With a divided legislature less likely to boost spending, traders may see room for more aggressive action from the Fed to pump money into an economy still reeling from the coronavirus. The central bank is likely to hold off from any major changes when it announces policy later today with the U.S. election still in the balance.
“Up until about last week, the consensus belief was a full blue sweep — now that’s changing you’re seeing a repricing taking place in the market,” Anna Han, equity strategist at Wells Fargo Securities LLC, said on Bloomberg TV. “We’re seeing a boost today because a more status quo Senate may ease the burden of regulations on the tech sector.”
In the latest election developments, Joe Biden won Michigan and Wisconsin, putting him on the brink of taking the White House from Trump, hours after the president’s team opened legal fights to stop vote counting in a least two states. Some votes in battleground states are still being counted.
Elsewhere, U.K. government bonds reversed an early advance as investors shifted their focus to the slower pace of debt-buying implied by the Bank of England’s new asset-purchase targets. Bitcoin climbed by more than US$1,000 to over US$15,000, more than doubling its value in 2020.
These are some of the main moves in markets:
Stocks
The S&P 500 Index increased 2.1 per cent to 3,515.51 as of 11:46 a.m. New York time, the highest in more than three weeks.
The Dow Jones Industrial Average climbed 2 per cent to 28,391.35, the highest in almost three weeks.
The Nasdaq Composite Index increased 2.4 per cent to 11,867.02, the highest in more than three weeks.
The Nasdaq 100 Index jumped 2.4 per cent to 12,054.07, the highest in more than three weeks.
The Stoxx Europe 600 Index advanced 1 per cent to 367.03, hitting the highest in almost three weeks with its fifth straight advance.
The MSCI All-Country World Index jumped 2.2 per cent to 591.43, the highest in more than three weeks on the biggest surge in more than 20 weeks.
Currencies
The Bloomberg Dollar Spot Index dipped 0.8 per cent to 1,155.05, the lowest in more than two years on the largest decrease in almost 10 weeks.
The euro increased 0.7 per cent to US$1.1812, the strongest in almost two weeks on the biggest increase in more than 14 weeks.
The Japanese yen appreciated 0.8 per cent to 103.65 per dollar, the strongest in eight months on the largest rise in more than two weeks.
Bonds
The yield on two-year Treasuries climbed one basis point to 0.15 per cent.
The yield on 10-year Treasuries gained two basis points to 0.78 per cent.
The yield on 30-year Treasuries increased one basis point to 1.55 per cent.
Germany’s 10-year yield advanced less than one basis point to -0.64 per cent.
Britain’s 10-year yield jumped three basis points to 0.236 per cent.
Commodities
West Texas Intermediate crude fell 1.3 per cent to US$38.66 a barrel, the largest fall in a week.
Gold surged 2.4 per cent to US$1,947.67 an ounce, the highest in almost seven weeks on the biggest jump in seven months.
