SINGAPORE (Reuters) – Bonds took care of losses as stocks and commodities gained on Thursday in anticipation of the Democratic government’s high debt and high-growth spending, following the party’s by-elections. control of the United States Congress.
The U.S. Treasury had suffered its strongest sales in months after Democratic victories in two Georgia races gave them tight control of the Senate, strengthening the power of President-elect Joe Biden to approve his agenda.
The sense of risk was temporarily dampened by images of supporters of President Donald Trump storming Capitol Hill, but the S&P 500 futures rose 0.6% and the Nasdaq 100 futures rose 0.8% in the Asian session when order was restored. FTSE futures rose 0.4% and EuroSTOXX 50 futures rose 0.2%.
Across Asia, large economically exposed stocks generated gains. Chip makers Samsung and SK Hynix brought Kospi to South Korea to a record high. Miners Rio Tinto and BHP reached all-time highs.
MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.7% and Japan’s Nikkei rose to 2% to its highest level since 1990.
“It’s basically a reform trade,” said Mathan Somasundaram, head of Sydney-based research firm Deep Data Analytics, who added that the Democratic sweep was unexpected for most investors and “changes a lot. “.
“While it has a very narrow margin, it offers Democrats a two-year term (to follow their agenda),” he said. “Anything that benefits from the price increase will go well … when you look at the policy settings they’re trying to get, it’s about printing (money for) Main Street and not Wall Street.”
Wednesday’s bond sell-off boosted U.S. Treasury yields to a 10-year benchmark above 1% for the first time since March. On Thursday it rose to 1.0510%. [US/]
The U.S. dollar shrank as the outcome became clearer because foreign exchange traders consider large and growing U.S. trade and budget deficits will affect the green dollar. [FRX/]
The dollar hit a three-year low against the $ 1.2349 euro and stood near that level on Thursday. It also languished near recent multi-year dumps against Australians, kiwi and Swiss franc.
CHAPTER CHAOS, DETERMINED CHINA
The exuberance was moderated by some sales in technology stocks, as investors expect the sector to face taxes and regulations and by disturbing scenes of protesters storming the Capitol to disrupt certification of Donald’s electoral defeat Trump.
Wall Street relaxed from the highs of the session as police evacuated lawmakers and fought for more than three hours to clear Trump supporters of the Capitol.
“What makes us a little pause is that the economy is still very fragile and I think it’s unlikely that Democrats will have as easy a time as the markets try to predict by approving some of these policies,” Tim said. Chubb, investment director for wealth advisor Girard in Pennsylvania.
Since then, Congress has reconvened to resume electoral certification, where it quickly became clear that pro-Trump Republican lawmakers’ objections to Biden’s victory on the battlefield states would be overwhelmingly rejected.
Meanwhile, U.S. crackdown on Chinese companies appears to be deepening, according to Reuters sources that the Trump administration is considering extending investment bans to tech giants Alibaba and Tencent.
Shares of both fell more than 4% in Hong Kong and those of three Chinese telecommunications companies that the New York Stock Exchange decided to eliminate after a week of investment also fell sharply.
Oil prices hovered near a ten-month high, taking over after a promised production cut by Saudi Arabia. Brent crude futures rose 0.7% to $ 54.69 a barrel and US crude futures rose 0.9% to $ 51.07 a barrel. [O/R]
Gold remained stable at $ 1,920 per ounce and bitcoin signing after hitting a new record of $ 37,800.
Report from Tom Westbrook to Singapore. Additional reports by Joori Roh in Seoul and Imani Moise in New York; Edited by Sam Holmes, Jane Wardell and Lincoln Feast.