TOKYO (Reuters) – Global stock prices fell and bond yields rose on Wednesday as investors looked to the prospect that Democrats could win the two seats at stake in the North Senate election -American in Georgia, who would give them control of the chamber.
Along with its narrow majority in the House of Representatives, a “blue sweep” of Congress could introduce greater fiscal stimulus and pave the way for President-elect Joe Biden to push for greater corporate regulation and higher taxes.
NBC called one of the races for Democrat Raphael Warnock, ousting incumbent Kelly Loeffler, while challenging Democrat Jon Ossoff maintained a narrow lead over Republican David Perdue in the other, with 98% of the votes counted. here
“With Biden proposing to reverse President Donald Trump’s tax cuts, raise the minimum wage and strengthen oversight of various industries, some might argue that his agenda is not particularly market-friendly,” said Vasu Menon, executive director of investment strategy at OCBC Bank in Singapore.
Futures for the S&P 500 fell 0.8%, while Nasdaq futures lost 1.6% amid fears that Democrats could apply stricter regulations to large tech companies.
Other industries, such as banking, oil and gas and healthcare, could be subject to strict control, while infrastructure and alternative energy sectors could benefit.
Japan’s Nikkei fell 0.4%, while the Asia-Pacific MSCI index, which excluded Japan, erased gains ahead of the flat trade.
European equities are rising at a recovery rate with a rise in Wall Street stocks overnight, with European futures trading traded between 0.5 and 0.7% higher.
The U.S. Treasury’s ten-year yield rose above 1% for the first time since March, according to expectations of higher government debt under a Senate where Vice President-elect Kamala Harris would become a tiebreaker .
“The reaction of American bonds reflects growing concern about the Democrats’ victory in the playoffs, ”said Shogo Maekawa, global market strategist at JPMorgan Asset Management.
“It is also natural for stocks to fall in the short term, as there may be tax hikes and stricter regulations on big technologies, etc. But on the other hand, there should also be positive factors, such as now more stimulus and more infrastructure spending. “
Vishnu Varathan, an economist at Singapore’s Mizuho Bank, expects the stock falls to be short-lived.
“My suspicion is that the immediate reaction would be a slightly stronger dollar and a slight decline in equities, because people are still sizing things up,” he said. “I don’t think it’s a trade that markets will continue to pursue and expand.”
Shares of Shanghai widened gains on Wednesday, with a CSI300 index rising 0.7% to its best levels since 2008, leaving aside the chaotic handling of the New York Stock Exchange on how Chinese companies will deal to comply with the sanctions set by the Trump administration.
The exchange made a second sudden change of direction as it says it is reconsidering its plan to allow three Chinese telecommunications giants to remain on the list.
Oil prices remained steady, keeping gains of nearly 5% on Tuesday after Saudi Arabia offered to make voluntary cuts in its oil production.
Tensions following the confiscation of a South Korean ship by OPEC Iran also drained nerves, adding more support to the market.
Tehran on Tuesday denied using the ship and its crew as hostages, a day after it seized the oil tanker in the Gulf while pressuring the demand that Seoul release $ 7 billion in frozen funds under U.S. sanctions.
U.S. crude futures added 0.3% to $ 50.09 a barrel, after rising 4.9% on Tuesday.
Gross international benchmark futures rose 0.6% to $ 53.94.
In foreign exchange, the US dollar hit a new low before returning to the prospects of the “blue bar” in Georgia.
The euro rose to $ 1.2328, the highest seen in April 2018, while the yen hit a ten-month high of $ 102.595.
Bitcoin rose more than 5% to reach a record high of $ 35,879.
Additional reports by Scott Murdoch in Hong Kong and Tom Westbrook in Singapore; Edited by Sam Holmes and Kenneth Maxwell