SYDNEY (Reuters) – Shares surged, oil prices rose and the US dollar remained weak on Monday on expectations for less regulatory reform and more monetary stimulus under US President-elect Joe Biden. assists risky appetite.
The Democratic candidate̵7;s election victory has been largely priced by the markets, which have traded with the views of President Biden and the Republican-controlled US Senate since last week.
E-mini futures for the S&P 500 were up more than 1.5% on Monday while Nasdaq futures rose more than 2%, signaling a positive start to the US market.
Eurostoxx 50 futures increased 1.7%, German DAX increased 1.8% and FTSE futures rose 1.4%.
Mood is also optimistic in Asia, with all major indicators bullish.
MSCI’s broadest index of Asia Pacific shares outside of Japan .MIAPJ0000PUS up 1.4% to 614.73 points, the highest since January 2018. It rose 6.2% last week for the best weekly performance since early June.
Dave Wang, portfolio manager at Nuvest Capital in Singapore, said: “While a lot of attention has been paid to Trump and Biden, the markets reacted strongly to the split conference (potentially happens), which means many people believe that interest rates will be lower in the long run, ”said Dave Wang, portfolio manager at Nuvest Capital in Singapore.
“The best opportunities are now in segments of emerging markets, especially China and North Asia. I believe that earnings momentum and valuations put China in a very attractive risk / reward position. “
Chinese stocks started higher with a blue-chip CSI300 index .CSI300 up 2.2% on the hope of better Sino-US trade relations under Biden.
Japan .N225 rose 2.4% while the main index of Australia .AXJO, Hong Kong .HSI and Korea .KS11 1.5% increase each.
Stocks rallied sharply last week, with the S&P500 .SPX up 7.3%, the best increase in an election week since 1932, according to National Bank Australia analyst Tapas Strickland.
However, Matt Sherwood of Australian fund manager Perpetual said Biden’s victory did not necessarily adjust his portfolio.
“Ultimately, we think the US economy is still quite fragile and growth is slowing down,” Sherwood said.
“You may be more likely to attract your portfolio to higher beta-type markets, such as emerging markets, and potentially better prospects in the energy space. in the case of being wiped out by the Democrats. “
Oil prices spiked on Monday as investors cheered Biden’s victory, eliminating worries about lackluster demand amid rising global coronavirus infections.
Brent crude plus $ 1 to $ 40.48.
The outlook may become tougher from here, analysts say, as investors focus on Biden’s ability to expand its fiscal stimulus and measures to reduce the spread of COVID-19. .
The United States saw a record number of new coronavirus infections last week, with a total of nearly 10 million cases.
US-based asset manager Jim Wilding at Confederation Finance Partner in Pennsylvania added a warning when reviewing the S&P 500 .SPX not far from all-time highs and equity valuations are generally high.
He noted: “While we remain positive on the medium-term outlook and believe that a divided government reduces the likelihood of a bear scenario, we will curb unrestrained enthusiasm at all levels. current degree.
A fiscal stimulus plan is doable despite a divided government, analysts say, although a larger package is less likely. That leaves the US Federal Reserve doing more to boost the world’s largest economy.
As a result, the dollar has weakened in recent days while growth currencies such as the Australian dollar have risen with the Biden presidency seen as less likely to be a trade confrontation.
The US dollar was mostly flat against the yen at 103.36, after slipping around 1.3 percent last week.
Aussie has hit a 1-1 / 2-month high of $ 0.7297, gaining 3.3% the week before trade exposure currencies got a boost from the predicted win. by Biden.
Investor focus will also be on the pound and euro this week with upcoming Brexit trade talks with the EU summit on November 15.
At the end of the day, the Chief Economist of the Bank of England will deliver a speech on ‘The economic impact of coronavirus and the long-term effects for the UK’.
The euro, up 1.9% last week, was slightly higher on Monday at $ 1.1891. Sterling rose 0.2% to $ 1,3183.
Report by Swati Pandey of Sydney; Additional reporting by Tom Westbrook and Michelle Price; Edited by Sam Holmes and Christopher Cushing