Stock Rally Builds as Investors Reassured on Vote: Markets Wrap
Bloomberg.com — After endorsing a Republican-dominated government two years ago, investors decided they also like a divided Washington. Stocks in Asia followed a strong U.S. session overnight, spurred by the narrative that checks and balances bode well for returns.
Equities in Japan led gains, alongside solid rises in Hong Kong and South Korea, and futures indicated the positive risk appetite will flow through to European shares. Earlier, the S&P 500 Index rose more than 2 percent as investors bet a split Congress dimmed chances President Donald Trump’s signature tax cuts will be reversed while reducing the possibility of major fiscal initiatives that might have pushed up interest rates. Treasury yields held gains. The dollar was flat.
“This election played out exactly like the polls were telling us, which was a reassurance,” Anne Lester, managing director and portfolio manager at JPMorgan Asset Management, told Bloomberg TV in New York.
With the elections out of the way, attention turns to Thursday’s Federal Reserve decision, with investors looking for any signals on the pace of policy tightening into 2019. China trade data showed a surge in exports and imports for October, months before the next round of tariff hikes in the trade war with the U.S. is set to kick in.
On Wednesday, U.S. tech stocks, which absorbed the brunt of October’s sell-off, led gains as the Nasdaq 100 surged more than 3 percent. Oil steadied after sliding for eight straight days.