Asian stocks rise as U.S. vote points to higher bar for regulation

In this news, we discuss the Asian stocks rise as U.S. vote points to higher bar for regulation.

NEW YORK (Reuters) – Asian stocks surged on Thursday as investors applauded U.S. election results which indicated a government less likely to impose strict financial regulation, while the pound fell on reports that the Bank of England could ease policy more than expected.

The gains followed those on Wall Street overnight, when financial markets mostly ignored the uncertainty that accompanied a close fight between President Donald Trump and his Democratic rival Joe Biden.

Indeed, investors looked beyond Trump’s lawsuits and a vote recount that would prolong the election, and instead focused on the performance of the Democrats, which was not as strong as some polls. had predicted. They said it indicated that a progressive agenda, which includes higher taxes, was not an option even if Biden wins.

E-Mini futures for the S&P 500 ESc1 rose 0.27%, Japan’s Nikkei .N225 climbed 0.3%, Australian stocks .AXJO rose 0.5%, while the The MSCI index of Asia-Pacific stocks outside of Japan .MIAPJ0000PUS rose 0.3% at the start of trading.

“The markets appear to be trading pending a financially tight Biden presidency with all less likely taxes, regulation and a massive stimulus,” analysts at Australian ANZ Bank said in a note.

But in a sign that not all investors were bullish on election uncertainty, Treasury yields fell as some sought to seek safety. The 10-year Treasury yield US10YT = RR languished at 0.7713%, far from a five-month high of 0.945% reached on Tuesday.

Data on Wednesday showed Biden holding a narrow lead over Trump in the states of Wisconsin and Michigan. The two Midwestern states play a critical role in the race for the 270 state-by-state Electoral College electoral votes needed to win the presidency. Trump’s quest for another term would be greatly affected if he lost both states.

Investors increasingly expect the Republican and Democratic parties to retain respective control of the Senate and House of Representatives, paving the way for a divided legislature that makes it harder to introduce new laws and regulations.

The prospect of a divided Congress boosted the dollar overnight as investors pushed back hopes of another generous round of US fiscal stimulus that would have dragged the dollar out.

At the start of Asian trading, however, the dollar = USD index had given up its gains and held steady at 93.429 against a basket of six currencies. It had reached a one-month high of 94.308 overnight. [USD/]

Expectations for a smaller fiscal stimulus package in the US weighed on XAU = gold, which hovered at $ 1,905.0712 an ounce.

Oil prices were firm, with US crude CLc1 at $ 39.06 a barrel, after data showed a sharp decline in US crude inventories.

The oil market has also hailed Trump’s false declaration of victory, as his support for sanctions on Iran and Saudi-led oil production cuts would raise oil prices.

A stronger dollar kept the euro EUR = EBS stuck at $ 1.17085, while the pound GBP = D3 fell 0.4% to $ 1.2939 following a report from The Telegraph newspaper that the BoE plans to switch to negative interest rates.

A separate report by The Sun newspaper also weighed on the British pound, which suggested that the BoE could expand its purchase program from 150 billion pounds to 200 billion pounds (194 to 258.6 billion dollars).

The reports preceded a scheduled monetary policy decision by the BoE on Thursday that will be announced at 7:00 GMT, postponed from the previously scheduled 12:00 GMT.

Economists polled by Reuters expect the BoE to expand its £ 100bn ($ 130bn) asset purchase program to £ 845bn due to the deteriorating economic outlook as the England begins second lockdown of COVID-19.

(1 USD = 0.7733 pounds)

Koh Gui Qing report; Editing by Sam Holmes

Original © Thomson Reuters

Originally posted 2020-11-04 17:36:11.

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