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Risk assets encourage Biden to win, dollars nurture losses



FILE PHOTO: A man eats a noodle lunch while watching the stock market price inside a brokerage company in Taipei
FILE PHOTO: A man eats a noodle lunch while monitoring stock market prices inside a brokerage firm in Taipei, August 10, 2011. REUTERS / Pichi Chuang / File Photo

9 November 2020

By Swati Pandey

SYDNEY (Reuters) – Stocks rose sharply, oil prices rose and the US dollar remained weak on Monday on expectations of less regulatory reforms and more monetary stimulus measures under US President-elect Joe Biden has aided a risky appetite.

The Democratic candidate̵

7;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%.

The mood is also positive in Asia, with all major indicators bullish.

The MSCI’s widest Asia-Pacific stock index outside of Japan jumped 1.4% to 614.73, the highest since January 2018. It rose 6.2% last week to hit the mark. best weekly productivity 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 have reacted strongly to the split conference (potentially happens), which means there is more confidence 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 shares started higher with the CSI300 blue-chip index up 2.2% on hopes of better Sino-US trade relations under Biden.

Japan rose 2.4% while the main indices of Australia, Hong Kong and South Korea increased 1.5% each.

Stocks surged last week, with the S&P 500 up 7.3%, the best gain 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 able to lure your portfolio towards higher beta markets, such as emerging markets, and potentially better prospects in the energy space than the case of being wiped out by the Democrats. “

Oil prices rose on Monday as investors cheered Biden’s victory, eliminating worries about lackluster demand amid rising global coronavirus infections.

Brent crude rose $ 1 to $ 40.48.

The outlook could 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.

Jim Wilding, US-based asset manager at Confluence Financial Partners in Pennsylvania, adds a warning considering the S&P 500 index is not far away from all-time highs and stock valuations usually high.

He noted: “While we remain positive on the medium-term outlook and believe that fragmented 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 the 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 like the Aussie have risen with Biden’s 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 Bank of England chief economist will deliver a speech on ‘Economic impacts of coronaviruses and 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.

Graphics – Asian stock markets: https://product.datastream.com/dscharting/gateway.aspx?guid=516bc8cb-b44e-4346-bce3-06590d8e396b&action=REFRESH

Graphics – Asia-Pacific Valuation: https://product.datastream.com/dscharting/gateway.aspx?guid=80e5bbdc-eae6-4b37-bc49-a2d8056b75de&action=REFRESH

(Reporting by Swati Pandey in Sydney; Additional reporting by Tom Westbrook and Michelle Price; Editing by Sam Holmes and Christopher Cushing)




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