LONDON v SINGAPORE (Reuters) – Bonds have eased their wounds and stocks rose on Thursday as investors bet that Democratic control of the US Congress would allow President-elect Joe Biden to borrow and spend heavily, with a bruised dollar is approaching its lowest level in almost three years.
U.S. Treasuries have extended their strongest payoff in months after Democrats’ two-race victories in Georgia gave them tight control over the Senate, strengthening President-elect Joe Biden’s power to get past his agenda.
Euro STOXX 600 in Europe gained 0.3%, with indices in Frankfurt and Paris by 0.4% and 0.6% respectively. Growth-related sectors, from energy to mining, have gathered at the prospect of a greater US stimulus.
The MSCI Global Capital Index, which tracks stocks in nearly 50 countries, rose 0.3%.
Previously, the largest MSCI index of Asia-Pacific equities outside Japan rose 0.6%, and the Japanese Nikkei reached its highest level since 1990.
Even after the sense of risk was struck earlier by images of President Donald Trump’s supporters storming Capitol Hill to try to overturn his election defeat, the future S&P 500 rose 0.6% as order was restored. and Congress returned to work.
It quickly became clear that pro-Trump Republican lawmakers’ objections to Biden’s victory on the battlefield states would be overwhelmingly rejected, including by most Republicans.
“For stocks it will be a positive net, for other asset classes it will be different,” said Olivier Marciot, portfolio manager at Unigestion, said of the Democrats’ victory.
“Yesterday’s bond moves were something I hadn’t seen in a long time. The case is for reflection. “
Wednesday’s bond sale pushed the yield on the US Treasury to a 10-year benchmark, rising as prices fall by more than 1% for the first time since March. It rose to 1.0660% on Thursday. [US/]
Yields on government bonds in the euro area also rose, with Germany’s 10-year yield rising slightly to -0.55%. Japanese government bond prices also fell, following US indices
GROSS DOLLAR
The ramifications of democratic victory were also played out in the foreign exchange markets.
The dollar fell on Georgia’s results to a three-year low against a basket of six major currencies, traders who bet that rising US trade and budget deficits would weigh on the green dollar. On Thursday, it returned 0.3% to 89,529.
In the face of the euro, it left near a three-year low of $ 1.2349, and also disappeared near the recent multi-year gutters against the Australian, Kiwi and Swiss franc.
However, some analysts said that rising bond yields could help the dollar’s fortunes.
“The Treasury’s higher yields should benefit from the dollar against the euro and the yen,” said Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities in Tokyo.
“However, the dollar will remain weaker against commodity currencies such as the Australian and emerging market currencies.”
Other risky assets increased.
Copper, a barometer of global growth, gained 0.3% to approach the 8-year high.
In Asia, Rio Tinto and BHP miners rose earlier to all-time highs, while chip makers Samsung and SK Hynix took South Korean stocks to a record high.
Oil prices remained around 10 months, following the brilliance of production promised by Saudi Arabia. In the long run, crude oil rose 0.7% to $ 54.68 a barrel.
Gold was steady at $ 1,921 an ounce, and bitcoin after reaching a record $ 37,800. The cryptocurrency has grown by more than a quarter already this month, after almost four times more than last year.
Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Montage by Kirsten Donovan