World markets follow Wall Street higher ahead of election

BEIJING (AP) — Global stock markets and United States (US) futures rose yesterday as investors hope for a possible victory by challenger Joe Biden in the American presidential election as it might lead to more economic stimulus.

London and Frankfurt opened higher, while Shanghai, Hong Kong, Seoul and Sydney also advanced. Japanese markets were closed for a holiday.

Traders are betting Biden might push for a bigger US stimulus if he unseats US President Donald Trump. That would require support in the Senate, which is controlled by Trump’s Republicans. Some incumbents, also up for re-election this week, face challengers from Biden’s Democratic Party.

On Monday, Wall Street closed higher amid indications Biden might be leading.

Many investors expect a “Democratic sweep, which is the key to unlocking Congress’ ability to deliver significant fiscal stimulus,” said Stephen Innes of Axi in a report.

In early trading, the FTSE 100 in London rose 1.1 per cent to 5,717.14 and the DAX in Frankfurt advanced 0.6 per cent to 11,854.23. The CAC 40 in France added 0.8 per cent to 4,730.68.

On Wall Street, the future for the benchmark S&P 500 index was up 0.8 per cent and that for the Dow Jones Industrial Average added 0.6 per cent.

A woman walks past a bank’s electronic board at the Hong Kong Stock Exchange. PHOTO: AP

The S&P 500 rose 1.2 per cent on Monday, while the Dow gained 1.6 per cent. The Nasdaq composite picked up 0.4 per cent.

In Asia, the Shanghai Composite Index rose 1.4 per cent to 3,271.07 and the Hang Seng in Hong Kong added two per cent to 24,939.73.

The Kospi in Seoul gained 1.9 per cent to 2,343.31. In Sydney, the S&P-ASX 200 rose 1.9 per cent to 6,066.40 after Australia’s central bank, as expected, cuts its key interest rate by 0.15 percentage points to 0.1 per cent.

Reserve Bank of Australia Governor Philip Lowe said it was committed to doing what it can to create jobs. The economy contracted in the first half, but Lowe said he expects official data to show some growth in the quarter ending in September. India’s Sensex advanced 1.4 per cent to 40,304.02. New Zealand and Southeast Asian markets advanced.

Investors have swung between optimism the global economy was coping better with the coronavirus pandemic and unease that US legislators have failed to approve new aid after expanded unemployment benefits that supported consumer spending expired.

Traders appear to be hoping a win by Biden and Democrats in the Senate might break the deadlock. Markets are uneasy about rising infection rates in Europe, which are prompting more governments to reimpose restrictions on travel and business.

Also this week, the US Federal Reserve is due to announce its latest decision on interest rates tomorrow. The US Labour Department releases its monthly jobs report the following day.

About 130 companies in the S&P 500 are scheduled to report results this week.

Investors worry that a contested election would mean it could be weeks before the winner of the White House is certain.

Which party gets control of the Senate may be just as important as the presidency. If Democrats can gain complete control of Washington, many investors expect them to deliver a big dose of support for the economy.

Democrats and Republicans have been haggling about a stimulus renewal for months, since the last round of supplemental benefits for laid-off workers and other stimulus expired. But a deep partisan divide has so far stymied progress. Investors and economists alike said the economy needs fresh stimulus, particularly when coronavirus counts are accelerating at troubling rates across Europe and much of the US.

Such worries helped drive the S&P 500 to a 5.6 per cent loss last week. That was its worst since March.

In other trading, benchmark US crude oil added USD0.48 to USD37.29 per barrel in electronic trading on the New York Mercantile Exchange. It gained USD1.02 on Monday to USD36.81 per barrel. Brent crude, the international standard, advanced USD0.41 to USD39.38. It rose USD1.03 to USD38.97 the previous session.

The US dollar declined to JPY104.56 from Monday’s JPY104.75. The euro gained to USD1.1686 from USD1.1658.