By Geoffrey Smith
Investing.com -- It's risk on across the world as Joe Biden emerged as the winner of the presidential election at the weekend. The dollar is down, stocks and oil are up. In all the euphoria, Covid-19 cases are hitting new records across the U.S. and Europe. Here's what you need to know in financial markets on Monday, November 9th.
1. Dollar weakens in global risk rally
The dollar weakened across the board as the increasing clarity over the U.S. presidential election supported risk-on trades in both emerging and advanced economy currencies.
By 6:15 AM ET (1115 GMT), the Dollar Index, which tracks the greenback against a basked of developed-market peers, was at 92.293, roughly stable from its overnight level but down nearly 2% over the last week and only 0.5% away from what would be a 30-month low.
Losses against emerging currencies were more severe, with the Chinese yuan gaining half a percent to its highest level since May 2018. The Russian ruble and Mexican peso also benefited from the return of risk appetite.
The big outperformer, however, was the lira, which gained nearly 6% against the dollar after President Recep Tayyip Erdogan fired his central bank governor and his finance minister resigned at the weekend
2. Global stocks hit record high on expectations for U.S. policy reset
Global stock markets soared on expectations of a reflationary U.S. fiscal policy, a continued loose monetary policy and a less nakedly confrontational trade policy under the new administration.
Chinese, Japanese and European markets all rose by between 1.5% and 2.5%, while the MSCI global equity index hit an all-time high.
Notable winners in Europe included Airbus (OTC:EADSY), which rose nearly 4% on expectations that the EU and U.S. would find a way to end a decade-old conflict over subsidies for their respective national champions in aerospace. That didn’t stop the EU from imposing tariffs on Boeing (NYSE:BA) in line with a WTO ruling from earlier this year.
3. U.S. stocks resume rally: fast food, entertainment earnings eyed
U.S. stocks were set to open sharply higher, in line with global stocks, as investors dismissed the chances of fresh volatility arising from the various recounts in individual states and the legal actions threatened by the Trump team from its bizarre press conference at a landscaping center parking lot on Saturday.
By 6:25 AM ET, Dow futures were up 421 points or 1.5% at their highest in nearly a month, while the S&P 500 futures contract was also up 1.5% and Nasdaq futures were up 1.7%. All three indexes had fallen on Friday in what looks likely to be a brief interruption of the post-election rally.
McDonald’s (NYSE:MCD) leads the roster of companies reporting early Monday, while Walt Disney (NYSE:DIS) and Lyft will both report after the closing bell.
Also of note will be speeches from the Cleveland Fed’s Loretta Mester and Philadelphia Fed President Patrick Harker.
4. Virus cases hit new records; Utah state of emergency
Euphoria over the end of election uncertainty aside, the battle against the coronavirus continues to go badly, with the U.S. again registering record numbers of new cases at the weekend. It has now recorded over 100,000 new cases nationwide for the last four days, while the level of hospital admissions, at over 55,000, is at its highest since early August and only 3,000 short of the previous record.
The state of Utah at the weekend declared a state of emergency at the weekend to address hospital overcrowding. The new measures announced include a statewide mask mandate.
The situation is hardly better in Europe, with Germany also reporting its highest level of new cases for one day.
5. Softbank manages $6 billion profit despite tech option fiasco
SoftBank (OTC:SFTBY) blew $1.3 billion on its unorthodox trades on technology stocks in the summer, but still ran up a profit of $6 billion for the third quarter, thanks largely to investment gains on its Vision Fund portfolio.
Softbank had become “the NASDAQ Whale” in the summer, betting billions of dollars largely through the options markets in trades that amplified the mania for tech stocks that emerged from the early stages of the pandemic.
Softbank stock rose 5% in Tokyo ahead of the results, which were published after the market close.