US equities continued to rally on Thursday and are set to end the week higher no matter what happens later today. The US election votes haven’t been counted yet, but it becomes clear that Democrat challenger Joe Biden is a winner, as he needs only 6 electoral votes to reach the 270 mark, while Trump is currently at 214. Still, it is also almost clear that Republicans would maintain control of the Senate and will be able to block any major policy changes that would threaten companies’ profitability. The fact that no “blue wave” is coming bodes well for the stock market, which is afraid of Democrats hiking taxes and introducing tight regulations.
Also, a divided Congress wouldn’t support a COVID relief package of a maximum size, which may prompt the Fed to inject more cash, eventually leading to more buying of shares.
As for the Fed, it left the interest rate (0.25%) and monetary policy unchanged on Thursday, as there is still no official winner and it’s not clear to what degree Democrats would control the Congress. The central bank said it would do whatever needed to support the economy whose recovery is losing steam. For example, US jobless claims fell modestly last week, which is one of the signs of a weakening recovery.
The S&P 500 rose 2.26%, the Dow added 2.06%, and Nasdaq surged another 2.68%. All 11 of the S&P’s major sectors ended the session higher, with tech and communication services being the best performers. Materials surged to a record, driven by a 6.5% increase in the stock price of US-German industrial gas producer Linde.
The S&P 500 has jumped more than 7% since Monday, its best four-day performance in about seven months. Elsewhere, Nasdaq is inches away from its all-time high.
Since Election Day, Facebook has surged over 11%, as investors don’t expect severe antitrust scrutiny.
Meanwhile, companies continue to report on their quarterly performance. Thus, video game maker Electronic Arts reported Q2 earnings that topped analysts’ estimates and revenue that fell short of expectations, dragging the share price down by over 6% in after-hours trading. Shares of Yelp and T-Mobile rose after the companies reported better-than-expected quarterly results. On the other side, Uber reported losses while AIG saw declining income in Q3.
In individual corporate news, the US government filed a lawsuit aiming to block Visa from acquiring fintech startup Plaid for over $5 billion, calling Visa “a monopolist in online debit transactions.”
In Asia, stocks are mixed in early trading on Friday, though they are set to end the week higher.
At the time of writing, China’s Shanghai Composite is down 0.56%, and the Shenzhen Component has dropped 1.14%. Hong Kong’s Hang Seng has declined by 0.14%.
Japan’s Nikkei 225 closed 0.99% higher. Toyota more than doubled its operating forecast for the next year, citing a rebound in sales in China. Still, the company’s operating profit fell 24% in its Q2.
South Korea’s KOSPI is up 0.10%.
In Australia, the ASX 200 rose 0.82%, as the Reserve Bank of Australia expressed its readiness to expand bond buying if needed to sustain the economy.
European futures are mixed but bulls dominate.
In the commodity market, oil prices continue to decline after a strong start of the week. Both brands have declined by over 2%, as investors are worried about weakening demand amid the fresh lockdowns imposed in Europe. Italy reported a record number of coronavirus cases on Thursday, while many US states also saw record figures this week.
Gold is retreating after surging over 2.6% yesterday. Currently, the metal is down 0.42% to $1,938.
In FX, the US dollar is recovering some losses after tumbling yesterday closer to the lowest level in two years. The USD Index is up 0.15% to 92.642, after hovering above 94.000 at the beginning of the week. Still, EUR/USD is up only 0.2% to 1.1824. The euro is under pressure amid a surging number of new COVID cases.
The British pound fell against both majors after the Bank of England ramped up its already huge bond-buying program on Thursday, though it left the interest rate unchanged at a record low of 0.1%.
