Stocks rally, dollar weakens on Biden’s formal transition

Bloomberg

Global stocks advanced for a second day as investors cheered the start of US President-elect Joe Biden’s formal transition. The dollar extended its decline to the lowest since 2018.
Energy stocks led the Stoxx 600 Index higher, with travel companies and banks also notching gains in a broad advance. Haven assets were weaker, with gold, Treasuries and the dollar declining.
Stock markets globally trended higher after the General Services Administration acknowledged Biden as the apparent winner of the presidential election. The move reduces political uncertainty in the US, giving Biden and his team access to current agency officials, briefing books, some $6 million in funding and other resources.
“Markets love certainty and the move by Trump overnight partially removes ambiguity over the presidential succession,” Jeffrey Halley, a senior market analyst with Oanda Asia Pacific Pte, wrote in a note. “A Biden administration is expected to be much less isolationist, with hopes that the US will reengage on global trade and improve relations with China.”
A combination of good news on a Covid-19 vaccine and reports that former Federal Reserve Chair Janet Yellen could be named as the next Treasury Secretary are giving investors more confidence to pile on risk. That’s fuelling the rotation out of defensive technology stocks and into assets that have been hardest hit by the pandemic, such as airlines and energy producers.
Wall Street is also viewing a possible Yellen appointment as reason to count on more economic stimulus. She recently said the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat.
Elsewhere, the New Zealand dollar jumped to its highest since 2018 while bonds declined as rate-cut bets were pared after a government proposal to add home prices to the central bank’s remit.
Germany’s DAX Index rose after the operator of the benchmark unveiled plans for the biggest overhaul since its inception in 1988. Qontigo, a unit of Frankfurt-based Deutsche Boerse AG, plans to increase the number of members to 40 from 30 and impose new quality criteria on both existing and prospective members.
In Asia, the Topix closed at the highest level since October 2018. Emerging market stocks were little changed.
Minutes of the most recent Federal Open Market Committee meeting are due on Wednesday. US jobless claims, GDP and personal spending data come on Wednesday.
UK expected on Wednesday to deliver the government’s spending plans for next year. Thursday sees a policy decision and briefing from the Bank of Korea. US celebrates the Thanksgiving holiday on Thursday.
The week ends with Black Friday, the traditional start
of the US holiday shopping
season.
Futures on the S&P 500 Index rose 0.7% in London. The Stoxx Europe 600 Index gained 0.5%. The MSCI Asia Pacific Index climbed 1%. The MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index dipped 0.4% to 1,145.30. The euro gained 0.3% to $1.1877. The British pound rose 0.4% to $1.3371. The Japanese yen strengthened 0.2% to 104.32 per dollar.
The yield on 10-year Treasuries climbed one basis point to 0.87%. The yield on two-year Treasuries increased less than one basis point to 0.16%. Germany’s 10-year yield rose one basis point to -0.57%. Britain’s 10-year yield rose one basis point to 0.331%.
West Texas Intermediate crude gained 1.4% to $42.15 a barrel. Gold weakened 0.6% to $1,827.19 an ounce.