Wall Street surged on Wednesday to extend its rally as investors are closely watching the counting of US election votes, with mail-in ballots being more complicated to count. Democrat candidate Joe Biden is closer to win with his 264 electoral college votes versus Trump’s 214 as of Thursday morning European time. Still, it seems that the Democrats’ “blue wave” is less possible and the likelihood of a divided Congress suggests that major policy changes would require consensus from both parties. That means it will be more difficult for Democrats to increase taxes and bring in tighter regulations.
So far, investors ignore President Donald Trump’s effort to contest election results, as he sued in three states and is aiming for a recount.
Republican Senator Susan Collins won surprisingly in Maine, leaving no hopes for Democrats to get control of the Senate.
The S&P 500 index rose 2.20%, the Dow added 1.34%, and Nasdaq surged 3.85%. For the tech-oriented index, it was the biggest daily gain since April 14, while the S&P 500 saw the best daily performance since June 5. In fact, this is the biggest post-election rally in US history.
The S&P healthcare index surged 4.45% to a record high, and the IT sector also jumped, as a gridlock in Congress narrows chances for increased antitrust scrutiny. Materials was the only sector to drop.
While stocks rallied, the increased chances for political uncertainty led to the biggest daily decline in US Treasuries. Shares of major banks declined.
Qualcomm shares surged over 11% in after-hours trading as it reported Q4 revenue and adjusted earnings per share that beat expectations by a margin. The company said that 5G demand supported chip sales.
Asian stocks are also bullish in early trading on Thursday, as the world is waiting for the US election results. Joe Biden is much closer to victory after winning in Michigan and Wisconsin earlier today. Still, the prospects for a divided Congress are leaving Biden less room to implement his agenda without impediments.
At the time of writing, China’s Shanghai Composite is up 1.24%, and the Shenzhen Component has gained 1.10%.
Hong Kong’s Hang Seng Index has surged 2.64%. Alibaba’s Hong Kong-listed shares jumped 5.70%, even though Chinese regulators halted the Shanghai and Hong Kong arms of Ant Group’s IPO, which should have become the world’s biggest listing ever.
Japan’s Nikkei 225 rose 1.91%, and Australia’s ASX 200 closed higher by 1.28%.
South Korea’s KOSPI is up 2.17%, and India’s Nifty 50 has increased by 1.34%.
European stocks will open higher to continue the rally.
Later today, the Bank of England and the US Fed will announce their monetary policy.
In the commodity market, oil prices are retreating after surging about 4% yesterday and gaining over 9% during the last three sessions. Both WTI and Brent are down over 1.80% as Biden is likely to win the US election. This is regarded as a bearish signal for oil markets, as Democrats want to push an energy agenda focused on renewables.
Gold is up on Thursday morning as Biden is closer to the 270 electoral votes needed to secure a victory. The metal is up 0.67% to $1,908. Biden is expected to support a larger COVID relief package, which would support the price of gold.
In FX, the US dollar has lost ground as it becomes clear that Biden will likely become winner, even though Democrats won’t have control over Congress. The USD Index fell 0.06% to 93.352. Some investors expect that Trump’s accusations related to vote counts and the ongoing uncertainty would support the greenback in the short-term. For now, EUR/USD is up 0.17% to 1.1742.
The pound fell 0.20% against the US dollar and 0.40% versus the euro as investors are waiting for Bank of England’s fresh quantitative easing and are preparing for potential negative rates for the first time ever.