Biden Win inflates risk assets, dollar nurses lose

SYDNEY (Reuters) – Stocks surged, oil prices surged and the dollar remained weak on Monday, as expectations of fewer regulatory changes and more monetary stimulus under US President-elect Joe Biden supported the appetite for risk.

The Democratic candidate’s victory in the US presidential election has been widely taken into account by the markets, which have been trading with a Biden presidency and a Republican-controlled US Senate since last week.

Future E-mini for the S&P 500 SC1 jumped more than 1.5% on Monday as Nasdaq futures NQc1 rose more than 2%, signaling a positive start for US markets.

Largest MSCI Asia-Pacific Equity Index outside of Japan .MIAPJ0000PUS jumped 1.3% to 613.95 points, the highest since January 2018. It had climbed 6.2% last week to record its best weekly performance since early June.

“Although much attention has been paid to Trump vs Biden, the markets have reacted strongly to the (likely) Congress of the split, which means that interest rates will be lower for longer,” said Dave Wang, manager portfolio at Nuveen Capital in Singapore.

“The best opportunities now lie in the emerging market segments, especially China and North Asia. I think the earnings momentum and valuation put China in a very attractive risk / reward position. “

Chinese stocks started higher with the blue chip CSI300 index .CSI300 up 1% on hopes of better Sino-US trade relations under Biden.

Japan .N225 increased by 2% while Australia’s major indices .AXJO, Hong Kong .HSI and South Korea .KS11 gained 1.7% each.

Stocks rebounded strongly last week, with the S & P500 .SPX up 7.3%, recording the best gains in an election week since 1932, according to National Australia Bank analyst Tapas Strickland.

Matt Sherwood of Australian fund manager Perpetual, however, said Biden’s victory did not necessarily justify a change in his portfolio.

“At the end of the day, we think the US economy is still quite fragile and growth is slowing,” Sherwood said.

“You could potentially attract your portfolio more to higher beta-type markets, such as emerging markets, and there is potential for better prospects in the energy field than would have been the case with a sweep. own democrat. “

Oil prices surged on Monday as investors applauded Biden’s victory, ignoring fears of lackluster demand amid rising coronavirus cases around the world. [O/R]

Brent raw LCOc1 added $ 1 to $ 40.48.

Analysts have warned the road could get tougher from here, as investors focus on Biden’s ability to expand fiscal stimulus and reduce the spread of COVID-19.

The United States has seen a record number of new coronavirus infections last week, with the total number of cases approaching 10 million.

Jim Wilding, US-based wealth manager at Confluence Financial Partners in Pennsylvania, added a word of warning with the S&P 500 .SPX not far from historic highs and generally exhilarating stock valuations.

“As we remain positive on the medium-term outlook and believe that a divided government reduces the chances of a bear scenario playing out, we will refrain from unbridled enthusiasm at current levels,” he said. he noted.

A fiscal stimulus package is still possible despite a divided government, analysts say, although 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, as growth indicators such as the Australian dollar AUD = rallied behind Biden’s presidency, deemed less likely to face trade.

The dollar was broadly flat against the Japanese yen JPY = at 103.31, after slipping about 1.3% last week.

The Australian rose 0.2%, after jumping 3.3% last week.

Investors will also be focusing on the British Pound and the Euro this week, with trade talks between the UK and the EU culminating in the EU summit on November 15.

Later today, the Chief Economist of the Bank of England will deliver a speech on ‘The economic impact of the coronavirus and its long-term implications for the UK’.

The euro EUR =, which climbed 1.9% last week, was a shade higher Monday at $ 1.1887. Sterling GBP = rose to $ 1.3183.