AP – Asian shares advanced yesterday after stocks rallied on Wall Street as investors embraced the upside of more gridlock in Washington, sending the S&P 500 index up 2.2 per cent while the outcome of the United States (US) presidential election remained in limbo.
Hong Kong’s benchmark led the region, gaining 2.6 per cent, while shares also rose by more than 1 per cent in Tokyo and South Korea.
Overnight, the S&P 500 rose 2.2 per cent for its best day in five months. The benchmark index had gained 3.5 per cent before the market lost some of its momentum toward the end of the day.
The Nasdaq was the standout, notching its biggest gain in more than six months as traders doubled down on technology stocks that are seemingly immune to pandemic shocks that bring more and more activity online.
The S&P 500 rose 74.42 points to 3,443.44. The Dow added 1.3 per cent to 27,847.66. The Nasdaq gained 3.9 per cent to 11,590.78.
In Asia yesterday, the Hang Seng in Hong Kong was at 25,532.56 while Tokyo’s Nikkei 225 index climbed one per cent to 24,105.28. South Korea’s Kospi jumped 2.1 per cent to 2,405.99. In Australia, the S&P/ASX 200 gained 0.9 per cent to 6,139.60. The Shanghai Composite index rose 0.9 per cent to 3,307.17. The future for the S&P 500 gained 0.8 per cent, while the Dow industrials’ future added 0.6 per cent.
The fate of the US presidency remained undecided as neither US President Donald Trump or Democratic challenger Joe Biden had secured the 270 Electoral College votes needed to win by yesterday. So far, the markets have acted as if the occupant of the White House might be a secondary concern.
“Notions that election uncertainty amid threat of a drawn out legal contest for the White House and Congressional gridlock (Democrat House-Republican Senate impasse) would have spooked markets couldn’t be further from the truth though,” Mizuho Bank said in a commentary.
“Instead, markets have been happy to presume that this Democrat White House and Republican Senate is the ‘Goldilocks’ outcome. In other words, a ‘Goldilocks Gridlock’.’’
With Republicans edging closer to retaining control of the Senate, prospects dimmed for the tax increases and tighter regulations on businesses that investors expected if Democrats had scored an electoral sweep.
However, a big stimulus effort for the economy that many economists and investors are pushing for now seems less likely.