TOKYO / NEW YORK – Global equities hit an all-time high while US dollar and US bond yields remained sluggish Friday on hopes of a split US Congress will hinder massive borrowing This could pave the way for further central banking stimulus.
Investors expect Democrat Joe Biden to beat President Donald Trump and Republicans to retain control of the Senate, allowing them to block Democrats̵7; policies such as increasing corporate taxes and spending by debt for infrastructure.
Hiroshi Watanabe, an economist at Sony Financial Holdings, said: “With fiscal stimulus prospects constrained by a possible deadlock in Washington, monetary policy is likely to have to be exercised heavily, promoting risky assets and putting pressure on the dollar, ”said Hiroshi Watanabe, an economist at Sony Financial Holdings.
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There is a feeling that a Biden presidency would be more predictable than Trump is also bolstering risk sentiment, although investors are not seeing a quick cooperation between Washington and Beijing on trade. and other issues.
The MSCI index of all the countries of 49 markets around the world inched up 0.05%, bringing its record high for September in sight.
Japan’s average Nikkei rose 0.9% to its highest level in 29 years while MSCI’s broadest measure of Asia Pacific shares outside of Japan rose 0.3% near a three-year high. .
European equities are reportedly giving up some major gains this week, with Euro Stoxx 50 futures down 0.8% and FTSE futures down 0.5%.
Hours before the bell open, the Dow fell 181 points (-0.64%) to 28,116, while the Nasdaq stood at 11,937.25, down 139.25 (-1.17%) and S&P also lost points. , standing at 3,477.50 points, down 27.25 points (-0.80%).
Yields on US bonds have dipped lower, with 10-year Treasury yields falling to 0.766%, 150 basis points below pre-election levels seen on Tuesday. It hit a three-week low of 0.7180% on Thursday.
The Federal Reserve keeps loose monetary policy and is committed to doing whatever is necessary to sustain the US economic recovery.
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Trump’s efforts to pursue electoral challenge lawsuits in some states have so far failed to change investor expectations about the election results.
However, some market players remain wary of the violent street protests, after Trump announced that the election was “stolen” from him.
With COVID-19 raging in the United States and parts of Europe, many investors found more monetary stimulus inevitable.
The Bank of England extended its asset purchase plan on Thursday while the European Central Bank is expected to announce more stimulus measures next month.
Investors also focused on the prospect of stalled negotiations over the restart of the US coronavirus bailout.
James Knightley, chief international economist at ING Group in New York, said: “We are still predicting that there will be a fiscal package that will exceed $ 1 trillion next year.
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“This stimulus, when combined with the long-awaited COVID-19 vaccine, can actually boost economies and spur growth. Therefore, we are still very optimistic about the prospects for 2021 and 2022 ”.
In the currency markets, lower yields weakened the dollar against its rivals.
The dollar index touched a two-month low of 92,473 and stood at 92,718 for the last time.
The euro traded at $ 1.1810 while China’s overseas yuan hit a nearly 2 1/2 year high of 6.6000 against the dollar.
The softer dollar supported the Japanese yen, which climbed to an 8-month high of 103.43 yen against the US dollar overnight. It was stable in the original Asian trade at 103.52 yen.
Gold, which has limited supply and is seen as a hedge against inflation in an era of extremely loose monetary and fiscal policy, fell slightly to $ 1,939 an ounce after gaining more than 2% overnight. .
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Even bitcoin rallied, recording a 10% gain on Thursday and hitting the highest level seen in January 2018.
The drop in oil prices due to new closures in Europe to avert the coronavirus epidemic has blurred outlook for crude oil demand. Brent crude oil fell 1.73% to $ 40.22 / barrel.