The Monday Market Minute
- Global stocks hit an all-time high as markets continue to rally following informal declarations of a Presidential victory for Joe Biden.
- World leaders reach out to congratulate Biden after all major U.S. TV networks project the former Vice President will win the 2020 election once results are officially certified.
- Incumbent President Donald Trump vows to challenge those results, while repeating his unsubstantiated claims of voter fraud.
- The U.S. dollar gains ground in overnight trade, but remains within a whisker of a ten-week low as investors bet on Federal Reserve stimulus in absence of a deal from the current lame-duck Congress.
- U.S. COVID infections top 10 million, with new cases rising by 120,000 per day, as the third wave of the pandemic accelerates in major economies around the world.
- Wall Street futures another solid open ahead of earnings from McDonald’s prior to the opening bell.
U.S. equity futures powered higher Monday, while a key measure of global stocks touched an all-time high, as investors reacted to the likely Presidential victory for Democrat Joe Biden and an administration that will be partly tempered by Republican control of the Senate.
Several U.S. TV networks called the election for Biden, 77, at mid-Saturday after vote counts in key swing states, including Pennsylvania, showed insurmountable leads for the former Vice President.
Incumbent Donald Trump, however, has vowed to challenge the results, marshalling s small legal team to pursue allegations of voter fraud while demanding recounts in Georgia and Wisconsin. However, Trump hasn’t been seen in public since Thursday and, despite several volleys of allegations on his Twitter feed, little if any credible evidence of large-scale voter fraud has emerged.
That has taken investors back to a Biden win and the implications for his administration-elect, whose spending ambitions are likely to be tamed by the Senate, which could remain in Republican control following run-offs for two seats in the state of Georgia in early January.
With Biden’s aim of repealing corporate tax cuts and pumping more cash into the COVID-hit economy unlikely to make it through the upper chamber, investors are hoping his measured leadership will improve foreign and trade relations while allowing U.S. companies to benefit from a low-tax backdrop and extended support from the Federal Reserve.
With that roadmap laid for out stocks in the near term, U.S. equity futures are set to extend the best post-election week of gains since 1932, with futures contracts tied to the Dow Jones Industrial Average priced for a 390 point opening bell gain.
Contracts tied to the S&P 500, which is only around 2% from the all-time high it reached on September 2, are indicating a 46 point opening bell advance while those linked to the tech-focused Nasdaq, which is up 38.5% for the year, are set for another 200 point boost.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.11% higher at 92.335, but was hovering just a few pips above a 10-week low, as investors start to factor in the prospect of more Fed stimulus in the absence of an agreement from the current lame-duck Congress.
Market enthusiasm for a Biden win, however, may be matched by the growing reality that the acceleration of coronavirus infections in the U.S. has reached worrying levels heading into the colder months of the year.
New cases have topped the 10 million mark, according to data from Johns Hopkins University, with daily infections rising at a rate of 120,000 and hitting record levels in various states around the country.
Similarly grim readings in Europe, however, failed to halt a global equity rally that lifted the MSCI World index to a record high in early Monday trading, while taking the Nikkei 225 in Japan to the highest levels since 1991.
European stocks, too, were looking at solid early gains that lifted the benchmark Stoxx 600 index past a one-month high, with the trade-sensitive DAX index rising 1.9% on the hopes of a new detent between Washington and Beijing — and indeed Brussels — under a Biden administration.
That optimism was also evident in oil markets, where global crude prices jumped past the $40 dollar mark despite concerns for energy demand amid the current European lockdowns and the prospect of more global supply if the U.S. were to ease sanctions on Iran under Biden in the early part of next year.
WTI contracts for December delivery, the U.S. benchmark, traded 83 cents higher from their Friday close in New York and were changing hands at $37.97 per barrel in early European dealing while Brent contracts for January, the new global benchmark, were seen 79 cents higher at $40.24 per barrel.