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Stocks surge as hopes grow for U.S. stimulus

EconomyOct 09, 2020 05:25AM ET
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© Reuters. Passersby wearing protective face masks walk past a screen displaying Nikkei share average and world stock indexes, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

By Tom Arnold and Hideyuki Sano

LONDON/TOKYO (Reuters) - World shares pushed on from one-month highs, with Asian stocks closing in on two-and-a-half-year highs, as expectations grew of a Democratic victory in U.S. elections next month, reviving hopes for more U.S. stimulus.

A widening lead for Democratic presidential candidate Joe Biden and the possibility his party will win both the Senate and the White House in the Nov. 3 vote has raised the prospect of a big economic stimulus.

The possibility of stimulus is also helping to counter investor wariness about a Democrat pledge to hike corporate tax rates.

The pan-European STOXX 600 index (STOXX) rose 0.3%, set for its second straight week of gains. Wall Street futures (ESc1) were up 0.4%.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.3%, inching closer to its Aug. 31 peak, which was its highest level since March 2018. China's CSI300 index (CSI300) gained 2% after the Golden Week holidays.

Japan's Nikkei (N225) dipped 0.1% after reaching a seven-and-a-half-month high.

The MSCI world equity index (MIWD00000PUS), which tracks shares in 49 countries, was up 0.1% at a more than one month high.

On Wall Street on Thursday, the S&P 500 (SPX) gained 0.80% and the Nasdaq Composite (IXIC) added 0.5%.

In a sign markets are pricing in a Biden victory, clean energy-related shares have outperformed in recent weeks. The iShares Global Clean Energy ETF (O:ICLN) has gained 14% so far this month, compared with 4% gains in the S&P 500 energy index.

"Biden seems to have a clear lead following the TV debate and a coronavirus cluster in the White House, which has raised questions about Trump's crisis management capabilities," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

A new Reuters/Ipsos poll found Americans are losing confidence in U.S. President Donald Trump's handling of the coronavirus pandemic. His net approval on the issue that has dropped to a record low.

The November contract of Volatility Index futures dropped to 30.25, its lowest level in three weeks, another sign of reduced worries about a contested election.

"The rise in U.S. yields, particularly at the long end, suggests increased expectations of a blue wave in the election," said Koichi Fujishiro, economist at Dai-ichi Life Research Institute.

The 10-year U.S. Treasuries yield has risen 8.5 basis points so far this week, to 0.779% (US10YT=RR). It hit a four-month high of 0.797% on Wednesday, but has slipped in part due to weak economic data.

The 10-year German bond yield was unchanged at -0.525% (DE10YT=RR). Other core yields were a touch lower (FR10YT=RR), (BE10YT=RR).

Data on Thursday showed the number of jobless claims in the U.S. came in 20,000 higher than economists expected at 840,000, showing unemployment in the world's largest economy remains historically high and a recovery in the labour market is losing momentum.

Additionally, the World Health Organization reported a record one-day increase in global coronavirus cases on Thursday, led by a surge of infections in Europe.

Graphic: Stocks versus COVID - https://fingfx.thomsonreuters.com/gfx/mkt/yxmvjbdyyvr/Pasted%20image%201601984809410.png

In the currency market, the dollar weakened against most other currencies, easing 0.1% against a basket of currencies (=USD) at 93.47 and down 0.4% for the week, the second week of declines in a row. It reached a two-month high at 94.75 in late September.

The Chinese yuan was the biggest beneficiary of the rising hopes of a Biden win, posting its biggest daily rise in more than four years after the holidays.

The yuan was last up 1.2% at 6.7112 per dollar in onshore trade and up half a percent to 6.7024 per dollar offshore .

The euro (EUR=EBS) rose 0.1% to $1.1776, while sterling added 0.2% to $1.2961 but fell against the euro after worse-than-expected UK gross domestic product data.

Oil prices edged up, propelled by supply outages caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway. Both benchmark contracts were on course for their biggest weekly gains since early June. [O/R]

Brent (LCOc1) was up 16 cents at $43.50 a barrel. U.S. West Texas Intermediate crude (CLc1) rose 14 cents to $41.33.

A weaker dollar boosted gold , which gained 1.1% to $1,914.28 per ounce.

Stocks surge as hopes grow for U.S. stimulus
 

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Comments (15)
Christopher Dunson
Christopher Dunson Oct 09, 2020 9:49AM ET
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The Wall Street 'poll' is decidedly Trump
rob finch
rob finch Oct 09, 2020 6:43AM ET
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Donald Trump is hosting Rush's show today.
Thao Bui
Thao Bui Oct 09, 2020 6:19AM ET
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79 easy to loss of memory. Why they hope. Wait the result after 3-nov
sean lxx
seanlxx Oct 09, 2020 6:12AM ET
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Yeah, up with “hopes” AGAIN
Dan OGrady
Dan OGrady Oct 09, 2020 5:50AM ET
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Rueter's must have a vested interest in the market. I think this is the 79th article from Rueter's today about non-existent stimulus bills
Zack Harding
Zack Harding Oct 09, 2020 5:50AM ET
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And every one tries ti insinuate a Biden victory, like they will talk us into it.
fauzi hassan
fauzi hassan Oct 09, 2020 5:23AM ET
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hope....not gonna happen...
Pat Mathieu
Pat Mathieu Oct 09, 2020 5:23AM ET
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If the walking-dead wins with his higher tax, regulations, debt & waste. Big Tech bubble will burst.
Zack Harding
Zack Harding Oct 09, 2020 3:56AM ET
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All these sources outside of US. LOL, just remember Clinton’s lead folks, it will be more dhocking this time around...See cities burning?...Democrat policySee success and peace?....Trump policy
perplexed76 .
perplexed76 . Oct 09, 2020 3:56AM ET
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clinton made one big mistake: she talked about putin 90% of the time. Biden much smarter. He talks about the US
Zack Harding
Zack Harding Oct 09, 2020 3:56AM ET
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perplexed76 . He has to, his son received millions from a Russian olegarch. Well documented in government docs...but...”debunked” by the media lol
OVER CULL
OVER CULL Oct 09, 2020 3:50AM ET
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Biden victory hope? HAHaHa!!!!
Zack Harding
Zack Harding Oct 09, 2020 3:45AM ET
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Biden hopes....liberal media is so desperate it is grossly pathetic.
Robson Penassi
Robson Penassi Oct 09, 2020 2:59AM ET
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"Biden hope" Is this a joke?
Zsolt Kovacs
Zsolt Kovacs Oct 09, 2020 12:54AM ET
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Anyway, why the stimulus bull.hit, if the money flows again to the capital markets?? The whole market is just sick. In many case PE 150-200 and still rising... where are we going??
Edward Chong
Edward Chong Oct 09, 2020 12:54AM ET
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going to 30000 lor :)
Zack Harding
Zack Harding Oct 09, 2020 12:54AM ET
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Exactly! Doesnt natter who is elected or what stimulus, market gonna get cut 60% one of these days. If not, 80%
Dan OGrady
Dan OGrady Oct 08, 2020 9:14PM ET
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freaks
Noah Cummings
Noah Cummings Oct 08, 2020 9:00PM ET
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“Volaltility COULD linger” lol its down heavily this weak on smoke n mirrors. All indices are the most above their 7 day moving averges since beginning on september after the BS august rally. The fact that no stimulus looks in sight and has been priced in since july shows how crooked the markets are rn.
Easy Trade
Easy Trade Oct 08, 2020 9:00PM ET
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The fact that you can't see how close to passing this is, that's the real joke here. You think billionaires who make millions a day are risking their money for no reason? It's already all but signed, and anyone with 2 eyes can see 2021 holds at least 2-3 more major stimulus bills or gov spending. Wake. Up.
Ronald Warren
Ronald Warren Oct 08, 2020 9:00PM ET
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If Trump wins-no stimulus. If Biden wins and Republicans still hold the Senate- no stimulus. Only if dems make a clean sweep will stimulus run wild.
Zack Harding
Zack Harding Oct 08, 2020 9:00PM ET
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Ronald Warren , if Republicans sweep, there will be pin-point stimulus for people. If Democrats sweep, there will be pork for progressive special interest and a dime for tge citizen fools to buy the next vote.
Jay West
Jay West Oct 08, 2020 9:00PM ET
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@Zack you are exactly right.
MICHAEL MARS
MICHAEL MARS Oct 08, 2020 7:57PM ET
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stop LYING
Chad Olsen
Chad Olsen Oct 08, 2020 7:57PM ET
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agreed!
 
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