Democrats won two runoff senatorial elections in Georgia
Despite chaotic scenes in Washington as Trump supporters stormed the U.S. Capitol, Wall Street stocks rallied overnight as expectations of more stimulus for the economy kept supporting investor sentiment. As Democrats won two runoff senatorial elections in Georgia, it has raised the potential for increased spending on infrastructure and other areas under President-elect Joe Biden’s administration. As such, the S&P 500 rose 0.56%, the Dow gained 1.44%, to a fresh record high, while the Nasdaq Composite shed early gains and lost 0.60%.
Today in Asia, equities were mostly positive as investors have been focused on the policy implications of the Democrats winning control of the U.S. Senate and the prospect for more stimulus spending to fuel economic growth. Elsewhere, in the latest minutes released Wednesday, the Federal Open Market Committee issued guidance it would continue purchases of bonds at least at its current pace until the economic recovery had made “substantial further progress.” In Asia, China’s Shanghai Composite shed 0.51%, the Nikkei 225 index in Tokyo gained 1.6%, South Korea’s Kospi climbed 2.14% and the S&P/ASX 200 in Australia advanced 1.6%.
European stock markets opened higher on Thursday on hopes of larger U.S. stimulus after Democrats won Senate control. The pan-European STOXX 600 index advanced 0.2% to hold near February 2020 highs. On the data front, according to Eurostat’s flash reading of the Eurozone CPI report, the annual reading came in at -0.3% in December, missing expectations of -0.2% and -0.3% previous. The core figures came in at 0.2% in the reported month when compared to 0.2% expectations and 0.2% seen in November.
Meanwhile, the dollar switched into a recovery mode on Thursday after another sell-off seen earlier this week. The euro got rejected from the 1.2350 area but still was holding above the 1.2200 figure during the European session. USDJPY, meanwhile, bounced from March lows around 102.60 and was flirting with the 20-DMA in recent trading. A recovery above this moving average on a daily closing basis would mark some improvements in the short-term technical picture.