The stock market loves Joe Biden

© Mark Lennihan / APA street sign for Wall Street is seen outside the New York Stock Exchange on Thursday, November 5, 2020. US futures and global stocks have surged as investors wait for the outcome of the US presidential election and embrace the benefits of a greater stalemate in Washington. (AP Photo / Mark Lennihan)

U.S. equity futures advanced early Monday as investors reacted to Joe Biden’s victory in the U.S. presidential election.

Dow futures were up 377 points, or about 1.3%. S&P 500 futures were up about 1.5% and Nasdaq futures were up 2%.

The upward move comes after shares ended largely unchanged on Friday. The Dow slipped 67 points, or 0.2%. The S&P 500 and the Nasdaq were flat.

Wall Street was already expecting a victory for Biden as the election appeared to tip in the Democrat’s favor throughout the past week. But investors are now in a position to react with more certainty: CNN projected on Saturday that Biden would become president of the United States as his path to victory in Pennsylvania appeared to provide him with enough electoral votes.

While the race for Senate control is still at stake – there is likely to be a Senate second-round election in Georgia ahead – investors also expect Republicans to occupy the chamber. Such an outcome would likely mean more modest policies on taxes and regulations.

“It’s what happens in the Senate race that could determine the next move up or down,” said Michael Hewson, chief market analyst at CMC Markets. “If that looks like it might change in the second round in January, then you might see some weakness in parts of the stock market in case the Democrats get their blue wave wish.”

Asia-Pacific markets also recovered on Monday. South Korea’s Kospi index rose 1.3%, while Hong Kong’s Hang Seng index rose 1.2% and China’s Shanghai Composite index climbed 1.1 %. Japan’s Nikkei – already traded at its highest level in nearly three decades – rose 2.1%.

Markets outside the United States will be looking for signs that a Biden administration will take a more diplomatic approach to international trade negotiations than President Donald Trump, according to Margaret Yang, a strategist at DailyFX.

A “new chapter in US foreign policy … is important to the world and of particular interest to export-oriented economies namely China, Mexico, [European Union] and Japan, ”Yang wrote in a note Monday.

For the future, investors will prepare for the next initiatives of the US president-elect. Biden announced in his victory speech on Saturday his intention to form a coronavirus task force that will help curb the spread of the virus. Biden is set to announce the names of his task force members on Monday, two knowledgeable sources told CNN. The number of coronavirus cases has seen an increase with more than 50 million Covid-19 cases reported worldwide. A double-dip recession is looming in Europe and there is a risk that fourth-quarter US GDP will turn negative as well.

And despite Biden’s victory, investors are still concerned about Trump’s reaction to the electoral defeat in the weeks to come.

“The only variable that cannot be factored in is that President Trump becomes even more erratic and unsettling over the next ten weeks,” said Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison LLP. “There is no telling what he might try to do and no ability to predict how the markets might react in response.”