Markets rise due to the demise of a “blue wave” election outcome
Wall Street stocks jumped on Wednesday as investors shrugged off the risk of legal challenges by President Donald Trump and the still-unresolved US presidential contest. In part, the rally was due to the demise of a “blue wave” election outcome that would have seen a complete Democratic sweep of Washington. As a result, the Dow Jones Industrial Average climbed 1.3%, rising for a third straight session. The S&P 500 gained 2.2% while the Nasdaq Composite Index advanced nearly 4%.
Today in Asia, equities followed suit and saw widespread gains during the session despite the reports that the Trump campaign was challenging vote counts in the key states of Wisconsin, Georgia, Pennsylvania and Michigan. The Hang Seng in Hong Kong gained 3.25% while the Shanghai Composite index rose 1.3%. Tokyo’s Nikkei 225 index climbed 1.7% and South Korea’s Kospi jumped 2.4%.
European equities opened higher on Thursday as investors digested the possibility of a dividend U.S. government. Meanwhile, the Bank of England extended the size of its quantitative easing program by £150 billion and said it expects the U.K. economy to contract in the fourth quarter. As a reminder, a new one-month lockdown in the UK starts today. On the data front, Germany October construction PMI arrived at 45.2 versus 45.5 in the previous month, confirming that the economic recovery has lost some steam in the construction sector and could deteriorate further amid tighter restrictions this month.
Meanwhile, the dollar came under some selling pressure as risk sentiment remained positive on Thursday. EURUSD climbed back to the 20-DMA but is yet to confirm the latest recovery on a daily closing basis. Later in the day, USD pairs could be affected by the outcome of the Federal Reserve monetary policy meeting while on Friday, the US jobs data will come into market focus.