U.S. Stock Futures Rally After Biden Wins Presidency

By Chong Koh Ping and Xie Yu

U.S. stock futures and global indexes jumped Monday as confirmation that Democrat Joe Biden had won the presidency gave investors fresh impetus.

The continuation of last week's rally in part reflected reduced uncertainty -- as the election looked largely resolved -- combined with expectations that a divided government would result in modest policy measures on taxes and spending.

S&P 500 futures rose 1.4%, while those tied to the Nasdaq-100 advanced 1.9%. In Europe, the pan-continental Stoxx Europe 600 was up 1.5%. Regional markets in Asia also rallied, with benchmarks in Japan, South Korea, India and Taiwan hitting multiyear or record highs.

On Saturday, the Associated Press said the former vice president had garnered enough electoral college votes to win, and on Sunday Mr. Biden forged ahead with his transition to the White House, charting a course for significant policy changes even as President Trump declined to concede the race.

"The market is cheering about more certainty and hopefully less volatility with Biden winning," said Ken Wong, a portfolio manager at Eastspring Investments. Investors were also positive about the prospect of the Republicans likely retaining control of the Senate, which could limit the Democrats' ability to introduce major initiatives such as rolling back tax cuts, Mr. Wong said.

Tai Hui, chief market strategist for Asia at J.P. Morgan Asset Management, said the region would benefit as higher trade tariffs became less likely. "A lot of the shocks we've experienced in the past three years will be less of a concern. And investors will welcome that," he said.

China's Shanghai Composite Index closed 1.9% higher and Hong Kong's Hang Seng Index rose 1.2%. The Chinese yuan rallied to about 6.56 per U.S. dollar in the offshore market, trading at its strongest levels in more than two years.

"The consensus is that Biden will be easier on trade and foreign policy, unlike Trump who is more erratic and aggressive," said Colin Low, senior macro analyst at FSMOne.com in Singapore. "This benefits Chinese stocks, and it can be seen from the cyclical sector, which has been rising faster than the other sectors in recent days."

Mr. Low said technology stocks also rallied, partly because investors expected Mr. Biden to give Chinese tech an easier time. U.S. tech giants have also surged in recent days. In Hong Kong, Tencent Holdings Ltd. stood 1.6% higher, after earlier hitting a record intraday high and Alibaba Group Holding Ltd. added 2.9%.

Japan's Nikkei 225 gained 2.1% to close at a fresh 29-year high, after also closing Friday at levels last hit in 1991. Car makers Honda Motor Co., Mazda Motor Corp. and Toyota Motor Corp. were among the biggest gainers.

The dollar weakened against currencies including the British pound and the Australian dollar. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, dropped 0.2% to 87.01, its lowest since June 2018.

"Globally, investors are just happy to turn the page on the U.S. elections," said Eli Lee, head of investment strategy at Bank of Singapore. Mr. Lee said the feared scenario of a drawn-out contested election had diminished, reducing uncertainty for markets and for policy makers such as the Federal Reserve.

"The Fed has been on the back foot for the past couple of months as it wants clarity on what policies would be on the fiscal front to craft monetary policies to support the economic recovery," he said.

Last week, key U.S. indexes rose the most since April.

The yield on the 10-year U.S. Treasury fell slightly to 0.813%. Brent crude, the global oil benchmark, rose 2.6% to $40.46 a barrel.

Write to Chong Koh Ping at [e-mail] and Xie Yu at [e-mail]

(END) Dow Jones Newswires

11-09-20 0337ET