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Biden win lifts world stocks to record peak; dollar fades

Published 11/08/2020, 05:51 PM
Updated 11/09/2020, 04:15 AM
© Reuters. FILE PHOTO: A man eats his lunch of noodles while monitoring stock market prices inside a brokerage in Taipei

By Danilo Masoni and Swati Pandey

MILAN/SYDNEY (Reuters) - World stocks hit a record high on Monday and the dollar stayed weak as expectations of better global trade ties and more monetary stimulus under U.S. President-elect Joe Biden supported risk appetite.

Markets started to trade on the prospect of a Biden presidency and a Republican-controlled U.S. Senate last week, but the Democratic candidate's projected victory on Saturday gave more fuel to the move.

The MSCI world equity index, which tracks shares in 49 countries, rose 0.5% to a record high in early European hours. On Friday, it posted its biggest one-week gain in nearly seven months.

E-mini futures for the S&P 500 jumped more than 1.4% on Monday. Nasdaq futures rallied more than 2% to just under a record high, signalling a positive start for U.S. markets.

MSCI's broadest index of Asia Pacific shares outside of Japan jumped 1.3% after hitting its highest since January 2018. The pan-Europe STOXX 600 climbed 1.5% to one-month highs by 0846 GMT.

"Why the excitement? Hopes of less diplomatic and trade angst, a lower dollar helps global rebalancing," Chris Bailey, European strategist at Raymond James in London said in a note. "A lot of hope... but over two months until inauguration day!"

Equities rallied last week, with the S&P 500 up 7.3%, clocking the best gain in an election week since 1932, according to National Australia Bank (OTC:NABZY) analyst Tapas Strickland.

Investors expect Republicans to maintain control of the Senate, making it harder for a Biden administration to push through major policy changes, from a planned tax hike to a big fiscal stimulus package.

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That would mean better earnings prospects for companies exposed to the world's largest economy but also that the U.S. Federal Reserve might have to step in to further ease monetary conditions and support a pandemic-hit economy.

The United States saw a record number of new coronavirus infections last week, with the total number of cases nearing 10 million.

Matt Sherwood of Australian fund manager Perpetual, however, said Biden's win did not necessarily warrant a tweaking of his portfolio.

"In the end, we think the U.S. economy is still fairly fragile and growth's slowing down," Sherwood said.

"You could potentially gravitate your portfolio more towards higher-beta type markets, such as emerging markets, and there is potential for better prospects in the energy space than would have been the case with a Democrat clean sweep."

Oil prices jumped on Monday as investors greeted the prospect of a Biden victory, shrugging off worries about lacklustre demand amid rising global coronavirus cases. Brent crude added nearly $1 to $40.35.

Analysts said the outlook might get tougher from here as investors focus on Biden's ability to expand fiscal stimulus and measures to reduce the spread of COVID-19.

U.S.-based wealth manager Jim Wilding at Confluence Financial Partners in Pennsylvania added a word of caution considering the S&P 500 is not far from record highs and equity valuations are generally at heady levels.

"While we remain positive over the intermediate-term outlook and believe divided government reduces the chances of a bear case scenario playing out, we would refrain from unbridled enthusiasm at current levels," he said.

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Expectations that monetary policy in the U.S. will remain easy and global trade relations improve has weakened the dollar in recent days. It posted its biggest weekly loss in more than seven months on Friday.

The dollar index was just above its lowest in around 10 weeks, up 0.1%, while growth and trade proxies such as the Australian dollar and the Chinese yuan remained in demand. The Aussie reached a seven-week high, up 0.4%, and China's yuan struck a 28-month high.

The euro, which climbed 1.9% last week, was unchanged. Sterling was also flat as the focus turned to Brexit trade negotiations coming to a head with the EU summit on Nov. 15.

Latest comments

Biden is all set to scrw up the american economy.. just wait/watch for a couple of weeks.. it will be clear
send contributions to GA senate race now unless you like 40% capital gains tax , payroll tax increase and decreased deductions. 30+ years of risk and building my business , providing jobs.... this is my gift for entering my golden years. welath redistribution here we come
Uh oh.. don't sleep or you might lose another state. Lol.
the clue is, larger stimulus is no way as divided/split congress make it difficult to go on.. economy is stagnan and people need cash.. dollar..
Why buy stock now. Must run before the Taxman Biden take all your profits. Must move all assets out to foreign countries by end December or very high tax.
Exactly. Taxes will eat your profits
But maybe the red tide is coming back. Who knows?
"they couldnt be at the polls because covid so they mail it" 2 days after polls : "thousands in the streets celebrating drinking from the same champagne"
The BIRD with Rump !!! hahaha
Biden revitalizes the markets after Donny destroyed them.
No more Orange cartoons or Kool Aid Deludes, but jails a calling ?!
Whatever happens, Bezos wins.  That is the only certainty
 No way!  David, the tech Billionaires are the life blood of the Dem touchy, hands off the cash cows, they will tell Biden.  I think Pelosi made a big deal with Bezos, many millions, and free botox injections
Bezos sold $3B of stock last week. Either he thinks this is the top or close to it.
Bezos has been selling his stock for quite a while now. That’s how he’s financing Blue Origin, his space venture. No top here!
I told you guys...when Humpty Trumpy falls off the wall, no one can put him back again...
Biden has not won yet
Of course, but ...there is mass hysteria, euphoria, you can't help them
Trump has played two days of golf during the most important time in his and his family's life...but those who know, know. Trump is relaxed, because he knows he trapped them all. Justice is coming and Trump will be victorious.
Is over....he needs to call the moving truck leaders have called and congrats...
he's done
You might be right
Given the massive scale of the mail vote fraud being discovered (>850K ballots and counting, plus software flipping all over in 39 States) and the small margins in WI, MI, PA, GA, and NV, it seems that the Trump odds of winning this are the best they have been yet.  Of course, the media calling victory for Biden is meaningless, has no bearing on anything except the propaganda sphere of influence.   When this is all sorted out, I give a >50% chance that Trump will reverse the States needed, and people will go to jail.  I suggest Devils Island.  Invest accordingly, hedge big with the UVXY.  Or don't.
oof, i hope you pock your stocks better than you pick your presidential election outcomes. This thing is over. You’re in denial, holding onto a TRMP stock that is plummeting to zero and hoping for a historic-level miracle. It’s not going to bounce man. Biden is the next President of the United States. The American people chose their president; world leaders, the media.. they’re just recognizing it. Obviously the have nothing to do with how we choose presidents. Don’t let Tucker Carlson twist you up.
 You will be in for a shocker, but not my problem.  Do you look at any news outside of the MSM (CNN, NYT, AP etc.) bubble?
 Educate yourself on the  actual facts so that you can cope with the outcome when it arrives.  Worried about the fallout with you guys; and the resulting strain on the mental heath care system.
Do you see that picture...that chinese hand, chopsticks and noodles pointing up...that means market is going up tomorrow...
do u see my finger ! me the finger...
Biden didn't win anything, the election was a complete farce.
Were the senate races also farcical?
The race in MI was, John James was likely the real winner.
let hope the market over time goes past 30k and we all get rich.
The FED is truly the enemy of the people. If this decline in the USD continues, the next generation will never be able to own anything - only rent.
Agree. Fed monetary policy conveniently abandoned control of inflation for employment numbers as basis for monetary policy. I lived through the inflation on the 1970's, which topped out over 18%. My first mortgage was at 13.5%. Not fun.
The dollar has lost 90% purchasing power since 1920. If we don’t disband the FED, what will happen by 2120?
I guess fee people see how calm Trump has been this entire time. Golfing, at a wedding, calm speeches. Calm during everything the left has thrown at him, and he won everytime. Those who know, know whats coming. The corrupt were obviously too busy to read the Art of War
No funny no exciting no Trump...
Trump supporters working to see that the election is certified correctly and each states electors are correct in order to vote for the President.
Time to watch the stock market crash with the fear of a lock down from Biden
No worry. Biden will do what he always did, listen to Wall Street. Once he takes office in February, all of sudden, folks will be ordered to return to work, wearing masks of course. Wall Street wants to make money, market will be ok.
 Is he taking his orders form Wall Street, or form the radical left in the House?  Green New Deal means BIG taxes, total destruction of the Economy.  Don't get fooled in this rally.
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