US stocks rally, shrugging off unfinished presidential contest
AFP
NEW YORK – Wall Street stocks powered higher Wednesday, shrugging off uncertainty over the still-unresolved US presidential election and embracing the positives of the likelihood of divided government in Washington.
Analysts attributed the rally, which accompanied gains in European and Asian equities, to the demise of a “blue wave” election outcome that would have seen a complete Democratic sweep of Washington, including a takeover of the Senate and a White House win by Joe Biden.
Biden is still well positioned to win the presidency, carrying leads in key states, but the Senate looks poised to remain in Republican hands.
That outcome will “moderate” policies from Washington, lessening the chances of major tax increases or overhauls to health care and other realms, said Shawn Cruz, senior market strategist at TD Ameritrade.
The market had “a little bit of a collective sigh of relief,” Cruz said.
“The good news is the uncertainty surrounding a very contentious election should soon be behind us,” Canaccord Genuity analyst Tony Dwyer said in a note.
He said that will allow investors to “focus on the macro influences that ultimately drive direction — inflation, interest rates, money availability and the prospects for domestic and global growth.”
All three major US indices advanced, with the Nasdaq climbing nearly four percent behind big jumps in Facebook, Amazon and other tech giants.
Equities rose in Paris, Frankfurt and London, and oil prices gained, while the yield on US Treasury bonds tumbled as investors bet against a major new infrastructure spending that would have been likely if the Democrats had swept US elections.
– Courtroom drama ahead? –
Investors for now have shrugged off worries about a protracted legal battle after Trump wrongly claimed victory Tuesday night. The closely-watched CBOE Volatility Index — which is seen as a proxy on fear — fell sharply.
Markets did not move on headlines that Trump would file legal challenges to seek a recount in Wisconsin after that state was called for Biden, Cruz said.
Trump has been threatening legal action for weeks in the event that he lost the vote, so some risk has already been priced in, analysts said.
Biden’s chances improved after he locked up the key swing state of Wisconsin, and after the close, Michigan too was put in his column, making his path to the needed 270 electoral college votes more likely. The major indices gained further in after-hours trading.
The presidential race has overshadowed a fairly heavy release of economic data, including reports Thursday that showed weaker-than-expected private hiring in October, and a softening of services sector activity.
The reports come ahead of the conclusion Thursday of the Federal Reserve’s two-day policy meeting.
Analysts are watching to see if the US central bank will signal plans to do more to help support the economy which continues to struggle to recover amid a worsening coronavirus outbreak.
On Friday, the US Labor Department will release jobs data for October.
– Key figures around 2230 GMT –
New York – Dow: UP 1.3 percent at 27,847.66 (close)
New York – S&P 500: UP 2.2 percent at 3,443.44 (close)
New York – Nasdaq: UP 3.9 percent at 11,590.78 (close)
London – FTSE 100: UP 1.7 percent at 5,883.26 (close)
Frankfurt – DAX 30: UP 2.0 percent at 12,324.22 (close)
Paris – CAC 40: UP 2.4 percent at 4,922.85 (close)
EURO STOXX 50: UP 1.9 percent at 3,161.07 (close)
Tokyo – Nikkei 225: UP 1.7 percent at 23,695.23 (close)
Hong Kong – Hang Seng: DOWN 0.2 percent at 24,886.14 (close)
Shanghai – Composite: UP 0.2 percent at 3,277.44 (close)
Euro/dollar: UP at $1.1732 from $1.1647 at 2100 GMT
Dollar/yen: DOWN at 104.50 yen from 104.66 yen
Pound/dollar: UP at $1.2993 from $1.2947
Euro/pound: UP at 90.27 pence from 89.96 pence
West Texas Intermediate: UP 4.0 percent at $39.15 per barrel
Brent North Sea crude: UP 3.8 percent at $41.23 per barrel
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Agence France-Presse
