Biden Win Raises Global Equities to Record High; the dollar is fading

MILAN / SYDNEY (Reuters) – Global stocks hit an all-time high on Monday and the dollar remained weak as expectations for better global trade relations and more monetary stimulus under US President-elect Joe Biden supported appetite for the risk.

Markets began trading the prospect of a Biden presidency and a Republican-controlled US Senate last week, but the Democratic nominee’s projected victory on Saturday gave more fuel to the move.

The MSCI World Stock Index, which tracks stocks from 49 countries, rose 0.5% to an all-time high in the early days of Europe. On Friday, he posted his biggest win in a week in nearly seven months.

E-mini futures for the S&P 500 jumped more than 1.4% on Monday. Futures on the Nasdaq rose more than 2% to just below a record, signaling a positive start for US markets.

The largest MSCI Asia-Pacific stock index outside of Japan jumped 1.3% after hitting its highest level since January 2018. The pan-European STOXX 600 climbed 1.5% to its highest one month at 8:46 a.m. GMT.

“Why the excitement? Hope for less diplomatic and trade angst, a lower dollar contributes to global rebalancing, ”said Chris Bailey, European strategist at Raymond James in London in a note. “A lot of hope … but more than two months until the day of the inauguration!”

Stocks rebounded last week, with the S&P 500 rising 7.3%, recording the best gain in an election week since 1932, according to National Australia Bank analyst Tapas Strickland.

Investors expect Republicans to maintain control of the Senate, making it harder for a Biden administration to push through major policy changes from a planned tax hike to a big fiscal stimulus package.

This would mean better earnings prospects for companies exposed to the world’s largest economy, but also that the US Federal Reserve may have to step in to ease monetary conditions further and support an economy stricken by a pandemic.

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

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 hailed the prospect of a Biden victory, ignoring fears of lackluster demand amid rising coronavirus cases around the world. Brent added nearly $ 1 to $ 40.35.

Analysts said the outlook could get tougher from here, with investors focusing on Biden’s ability to expand fiscal stimulus and reduce the spread of COVID-19.

Jim Wilding, US-based wealth manager of Confluence Financial Partners in Pennsylvania, added a word of caution, considering the S&P 500 is close to record highs and stock valuations are usually at exhilarating levels.

“While 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 declares.

Expectations that monetary policy in the United States will remain easy and improving global trade relations have weakened the dollar in recent days. He posted his biggest weekly loss in more than seven months on Friday.

The dollar index was just above its low in about 10 weeks, up 0.1%, while growth and trade indicators such as the Australian dollar and Chinese yuan remained in demand. The Aussie hit a seven-week high, up 0.4%, and the Chinese yuan hit a 28-month high.

The euro, which climbed 1.9% last week, remained unchanged. The pound sterling was also stagnant as attention shifted to the Brexit trade talks that culminated in the EU summit on November 15.